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,” ...

Learn how option premiums are determined by factors like stock price, time to expiration, and volatility. Master the basics to trade options wisely and confidently.

Option pricing is calculated using the Black-Scholes model, which takes four influential factors into account: the price of an underlying stock (assuming constant drift and volatility), an option’s ...

In options trading, assessing intrinsic and extrinsic value can help determine an option's price. Intrinsic value shows the profit from immediate exercise, while extrinsic value accounts for factors ...

Options trading can often be complex, but understanding how these financial instruments are priced is crucial for anyone diving into this market. Options derive their value from an underlying asset, ...

Time decay is the natural reduction in an option's price as expiration approaches Time decay refers to the rate at which time reduces the value of an option. First, it's essential to understand that ...

What Is a Call Option? A call option is a contract that gives the buyer of the option the right to purchase a security, such as a specific stock, at a specific price (referred to as the strike price).

Discover how to adjust your options strike price after trading with strategies like offsetting trades and understand the exercise process for American and European options.

Delta is a measure related to options that traders can use to predict option price movements based on the change in the underlying asset. It can also be used to assess the probability that a given ...

Options can be used to express specific trading views, but before diving into options trading, you must understand how an option premium works — a vital component that can make or break your trading ...

What is Theta? What is option time decay? How does time decay work? These are common questions of beginning options traders. Theta is the Greek term used to denote option time decay. Theta is one of ...