Skip to main content
Derivatives

Extrinsic Value

The intrinsic value is the inherent value of an option determined by its underlying asset's current price. This means that the extrinsic value is influenced by factors such as time until expiration, volatility, and interest rates.

Understanding the concept of extrinsic value is crucial for investors in the realm of finance. It refers to the additional value that an option holds beyond its intrinsic price, which is based on the underlying asset's current market price. In simpler terms, it is the premium that investors are willing to pay for the potential future profits of the option. However, this value is not set in stone and is subject to various external factors such as time, volatility, and interest rates.

Related terms

Initial Margin

Understand the meaning and definition of Initial Margin in the context of stock market, trading, and investments.

MORE
Expiration Time

Understand the meaning and definition of Expiration Time in the context of stock market, trading, and investments.

MORE
Holder (Option Buyer)

Understand the meaning and definition of Holder (Option Buyer) in the context of stock market, trading, and investments.

MORE
Clearing Margin

Understand the meaning and definition of Clearing Margin in the context of stock market, trading, and investments.

MORE
Options Contracts

Understand the meaning and definition of Options Contracts in the context of stock market, trading, and investments.

MORE
European Options

Understand the meaning and definition of European Options in the context of stock market, trading, and investments.

MORE

Open Free Demat Account!

Join our 3.8 Cr+ happy customers

+91
Explore other categories
Enjoy Zero Brokerage on Equity Delivery
10 Cr+DOWNLOADS

Enjoy Zero Brokerage On Stock Investments

Get the link to download the App

Scan this QR code to download the app
Get it on Google PlayDownload on the App Store

Open Free Demat Account!

Join our 3.8 Cr+ happy customers
+91