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The Skinny on Options: Abstract Applications

Extrinsic Value Lite

| Jan 27, 2020
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    The Skinny on Options: Abstract Applications

    Extrinsic Value Lite

    Jan 27, 2020

    As tastylivers, who focus exclusively on selling out-of-the-money (OTM) premium, it’s important to recognize that any option that is OTM will be 100% extrinsic value. Furthermore, if these options remain OTM at expiration, their price will fall to zero, and they will effectively be worthless. This is essentially the best-case-scenario for selling OTM options.

    As a result, it begs the question: is this a consistently sustainable strategy? In today’s piece, we see that it is not, and a more reasonable expectation is to capture approximately 25% of all the extrinsic that we sell.

    This video and its content are provided solely by tastylive, Inc. (“tastylive”) and are for informational and educational purposes only. tastylive was previously known as tastytrade, Inc. (“tastytrade”). This video and its content were created prior to the legal name change of tastylive. As a result, this video may reference tastytrade, its prior legal name.

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