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,” ...

Intrinsic value is one way to measure the value of an option contract. Here, we take a closer look at the metric and explain how it is used in options trading. In the world of investing, options ...

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 ...

As you may well be aware, it's very common for option players to close out their trades without ever touching the underlying equity. In other words, they're not looking to acquire or sell the ...