External motivation, or “extrinsic motivation” in psychology, refers to an outside force that moves a person to do something they might not normally do. This could be a reward, praise or punishment.
In options trading, intrinsic and extrinsic value reveal important details about an option’s price and potential profitability. These values can guide decisions that fit your investment strategy.
For options traders, the extrinsic value of an option can help determine how much of its premium is driven by market expectations versus its intrinsic, or immediate, worth. Analyzing extrinsic ...