Calculating Intrinsic and Extrinsic Value

Step-by-step examples show how to break down option prices into their two components. See why calls and puts on the same strike always contain equal amounts of extrinsic value.

0:07 Intrinsic vs. Extrinsic Value
0:26 Calculating Intrinsic Value
1:08 Understanding Extrinsic Value
1:43 Components of Extrinsic Value
2:09 Intrinsic Value Does Not Decay
2:27 Extrinsic Value and Theta
3:15 Breaking Down the 50 Call
3:41 Calculating Intrinsic and Extrinsic

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