Can an OTM Option Have Extrinsic Value? Explain

Yes, an Out-of-the-Money (OTM) option's entire premium consists solely of extrinsic value (time value and implied volatility). Since the current market price is unfavorable to the strike price, the intrinsic value is zero.

The premium exists because there is still time remaining until expiration, and the underlying asset's price has the potential to move favorably, making the option profitable.