I'm new but am going to take a stab at this, just for my own learning more than anything else.
Intrinsic value is the internal value of the option itself, the value of the option if it were exercised immediately. It is the amount the option is in the money.
Extrinsic value is the "time value" of the money. It is equal to the option price, minus the intrinsic value of the option. Out of the money options therefore are comprised entirely of extrinsic value since they have no intrinsic value.
Intrinsic value is the internal value of the option itself, the value of the option if it were exercised immediately. It is the amount the option is in the money.
Extrinsic value is the "time value" of the money. It is equal to the option price, minus the intrinsic value of the option. Out of the money options therefore are comprised entirely of extrinsic value since they have no intrinsic value.
From: paul7313 <paul7313@yahoo.
To: OptionClub@yahoogro
Sent: Wed, February 10, 2010 12:33:07 PM
Subject: [TheOptionClub.
what is intrinsic value?
extrinsic value ?
Examples? options
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