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Intrinsic vs Extrinsic Value in Options Explained

Intrinsic vs Extrinsic Value in Options Explained

An option’s price is made of two parts: intrinsic value and extrinsic value. Intrinsic value is the real, in-the-money portion — how much you’d gain if you exercised right now. Extrinsic value is everything else: the premium you pay for time and volatility. Understand the split and you understand why options gain and lose value […]

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