Home > Terms > English, UK (UE) > Extrinsic value
Extrinsic 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.
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- Part of Speech: noun
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- Industry/Domain: Financial services
- Category: Commodity exchange
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