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Which State of Moneyness Typically Has the Highest Extrinsic Value?

At-the-Money (ATM), as it represents the point of maximum uncertainty about the final intrinsic value.
Greeks.Live03.11.25

Which State of Moneyness Typically Has the Highest Extrinsic Value?

The At-the-Money (ATM) state of moneyness typically has the highest extrinsic value (time value). This is because the ATM option has the greatest uncertainty about its final outcome, and its intrinsic value is zero or near zero.

The option's premium is primarily composed of this time value, which reflects the possibility of a favorable price movement before expiration.

Why Does an At-the-Money Option Exhibit the Highest Gamma?
Why Is Theta Highest for At-the-Money Options?
Why Do ATM Options Generally Have the Highest Time Value?
How Does the Concept of “Uncertainty” Relate to the Maximum Gamma Point?

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