What are the differences between intrinsic and extrinsic options in the context of cryptocurrency?

1 answers

• Mar 23, 2022 · 3 years ago
  BYDFi, a leading cryptocurrency exchange, explains that intrinsic options in cryptocurrency are determined by the difference between the strike price and the current price of the underlying asset. If the option is in-the-money, it has intrinsic value. Extrinsic options, on the other hand, derive their value from factors other than the asset's price, such as time, volatility, and market conditions. These factors can influence the extrinsic value of the option. Understanding the differences between intrinsic and extrinsic options is crucial for cryptocurrency traders to make informed investment decisions. While intrinsic options are more directly tied to the asset's price, extrinsic options are influenced by a range of external factors that can impact their value.
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