Extrinsic value is also known as time value. The amount of time remaining in the option is a key value for pricing and determines how long the underlying has to move up or down at current or future volatility.
The options price curve created on a graph by plotting option's price against period of time passed. This curve, created by a mathematical model, is important for option traders as it depicts the time value at different fixed points in time.[click to read more]
A general term in which strategy is utilized to take advantage of option's decaying premium associated with time value, implied volatility, neutralized spreads and arbitrage opportunities with a goal to make a reasonable and consistent return on investment.[click to read more]
The sudden decrease in the expected move or volatility of the underlying security. The extrinsic or time value of the option reduces from high to low amounts suddenly as a result. This is most commonly seen immediately following corporate events, such as earnings annou[click to read more]