What Is the Primary Driver of an Option’s Extrinsic Value besides Time?

The primary driver of an option's extrinsic value besides time is implied volatility (IV), often measured by the Greek Vega. Higher IV reflects a market expectation of larger future price swings, which increases the probability that the option will move further into the money before expiration.

This increased potential for profit translates directly into a higher extrinsic value, making the option more expensive.