Extrinsic Value
Extrinsic value is the amount over the parity price. The price of an ITM option is made up of both intrinsic and extrinsic values unless it is trading at parity to the underlying. If you add the premium to the strike price, in the case of a call the excess amount is known as ?extrinsic value.? In the case of a put, the differential between the underlying and the resulting price after subtracting the premium from the strike.
Here’s some intrinsic and extrinsic value basics:?Keeping Options Simple