Extrinsic Value Changes in Short Options

<p>As out-of-the-money premium sellers, <a href="https://ontt.tv/skJMG" target="_blank">extrinsic value is the name of the game</a>. Specifically, the textbook end goal is for the extrinsic value of our positions to fall to zero, which they would do if they remained OTM, and we held them until expiration. But along the way, even if a position is OTM, its extrinsic value can increase, which would work against our profitability. As we look at our <a href="https://ontt.tv/isYXE" target="_blank">Broken-Wing Butterfly in QQQ</a>, we see this exact phenomenon playing out in real-time.</p> <p>Be sure to connect with <a href="https://twitter.com/jschultzf3" target="_blank">Dr. Jim on Twitter</a>!</p>