Troy Segal is an editor and writer. She has 20+ years of experience covering personal finance, wealth management, and business news. Gordon Scott has been an active investor and technical analyst or ...

In options trading, the extrinsic value of an option represents the portion of the option's price that's based on factors other than the immediate value of exercising it. Also known as “time value,” ...

In the world of investing, options trading can often appear as a complex puzzle. One of the puzzle pieces that frequently demands attention is the concept of "intrinsic value" in options. This article ...

Investopedia contributors come from a range of backgrounds, and over 25 years there have been thousands of expert writers and editors who have contributed. Thomas J Catalano is a CFP and Registered ...

Option price is the value of an option contract. The option price is impacted by intrinsic value and extrinsic value. Intrinsic value is determined by the difference between the strike price of the ...

Option pricing is calculated using the Black-Scholes model, which takes four influential factors into account: the price of an underlying stock (assuming constant drift and volatility), an option’s ...

Buying stock or even deep-in-the money calls on high-priced stocks like NVDA can require a lot of capital. A ZEBRA option spread simulates a long stock position at a lower cost with the same upside as ...

Options traders typically want their option contract to be “in the money,” meaning the contract has greater value than buying or selling based on current market values. But depending on your risk ...