What Is the Significance of an Option Having Zero Intrinsic Value but a Positive Market Price? ▴ Learn

What Is the Significance of an Option Having Zero Intrinsic Value but a Positive Market Price?

This situation is normal for all at-the-money (ATM) and out-of-the-money (OTM) options. The positive market price, or premium, of such an option is purely composed of extrinsic value, also known as time value.

This value represents the possibility that the option could become in-the-money before it expires. The amount of time until expiration and the expected volatility of the underlying asset are key factors that determine the size of this extrinsic value.

How Does a DAO’s Governance Model Respond to a Real-Time Security Exploit of Its Financial Contracts?

What Is the Psychological Impact of a “Dead Cat Bounce” on Market Participants?

How Do Transaction Fees Become a More Critical Factor for Miner Revenue after a Halving?

Are There Any Cryptocurrencies That Have Successfully Transitioned to a New, More Secure Hashing Algorithm, and What Was the Impact on Their Valuation?