Stock Trading for Beginners

Option Prices Explained for Beginners - Understand Intrinsic and Extrinsic Values

• Tyler Stokes • Season 1 • Episode 18

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0:00 | 25:15

Welcome to Episode 18 of the "Day Trading for Beginners Podcast". In this episode, we're talking about how options are priced. It's our third chat about options, building on previous ones about what options are and buying and selling them.


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Note: This episode was originally released under the podcast name Day Trading for Beginners, now rebranded as Stock Trading for Beginners.


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What We Cover Today:

  • Option Prices: Why do you pay what you do for options, whether buying puts or calls?
  • In the Money, At the Money, Out of the Money: Simple explanations to help you understand these key concepts.
  • Intrinsic and Extrinsic Values: Breaking down the two main parts that make up an option's price and why it's important.
  • Time and Volatility's Role: How the time left until an option's expiration and the implied volatility affect its extrinsic value.
  • Implied Volatility: How the market's guess about a stock's future movement can change the price of options.
  • Learning Tools: Sharing useful resources and platforms, including a free community platform and an options course module filled with my go-to resources.


Wrapping It Up:

This episode aims to make understanding option pricing straightforward, focusing on intrinsic and extrinsic values—key knowledge for dealing with options.


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For more resources, including videos and a community of traders, head over to StokesTrades.com. Let's learn and grow together in trading.

Stay tuned for more simple explanations of trading concepts. Let's make trading easier to understand, one episode at a time.

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