Extrinsic value is a product of selling out of the money options. But as a general guideline, how much should we be carrying in a portfolio?
First we must consider allocation levels which will change based on volatility levels. Higher volatility more capital at work, means more extrinsic value we should be carrying on our books.
What we discover in this segment is a new rule to for the right balance of extrinsic to capital available.
Join Tom and Tony in today’s segment as they dig deeper into this topic.