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,” ...

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Options trading can often be complex, but understanding how these financial instruments are priced is crucial for anyone diving into this market. Options derive their value from an underlying asset, ...

Time decay refers to the rate at which time reduces the value of an option. First, it's essential to understand that time decay is exponential and accelerates as expiration draws closer. The rate of ...