The amount by which the premium exceeds its intrinsic value. Also known as time value.
The price of an option over and above the intrinsic value. This "value" is commonly called the option's " time value". ill or Kill Order This type of order instructs the floor broker to execute your order immediately at the specified price. If the floor cannot fill the order immediately, the order is canceled.
The price of an option less its intrinsic value. An out-of-the money option's worth consists of nothing but extrinsic or time value.
The amount of money option buyer are willing to pay for an option in the anticipation that, over time, a change in the underlying futures price will cause the option to increase in value. In general, an option premium is the sum of time value and intrinsic value. Any amount by which an option premium exceeds the option's intrinsic value can be considered time value. Also referred to as time value.
Also known as time value. Extrinsic value is the price of an option minus its intrinsic value. As out of the money options have no intrinsic value, their option premium is based entirely on extrinsic value.
Time value. That part of the option premium which is not accounted for by its intrinsic value.
The price of an option minus its intrinsic value. Out-of-the-money options consist entirely of extrinsic value which is the option's time value.
The price of an option less its intrinsic value. In the case of out-of-the-money options, the optionâ€(tm)s entire price consists only of extrinsic value. Extrinsic value is made up of several components, with the largest being volatility. Also known as Time Value.
Extrinsic value is value which arises because of an agreement: Although the intrinsic value of a €100 note is not much more than the value of any similar piece of paper with a pretty picture on it, it has a practical value (an extrinsic value) of €100. If its issuing authority were to fail to honor the note's value, it would soon become nearly worthless. This happened recently with the Argentinian peso.