All termsOptions FundamentalsStart here
Extrinsic Value
Extrinsic value is the portion of an option's premium above its intrinsic value. In simplified form: Extrinsic Value = Option Premium − Intrinsic Value It reflects factors including remaining time and expected future volatility.
Why it matters to you
An option can have substantial value even when it has no intrinsic value. This is one reason an OTM option can still trade for a meaningful premium before expiration.