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,” ...

At the beginning of 2022 I hit on a better way than going short to hedge my long positions: buying cheap put options on stocks I expected to tank. Following this strategy was very profitable at first, ...

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 ...

Troy Segal is an editor and writer. She has 20+ years of experience covering personal finance, wealth management, and business news. Gordon Scott has been an active investor and technical analyst or ...

Time decay refers to the rate at which time reduces the value of an option. First, it's essential to understand that time decay is exponential and accelerates as expiration draws closer. The rate of ...