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The mechanics of options markets: (derivatives and risk management) Explain the following concepts: 1. Intrinsic (IV) and extrinsic (EV) values of an option 2. How

The mechanics of options markets: (derivatives and risk management)

Explain the following concepts:
1. Intrinsic (IV) and extrinsic (EV) values of an option
2. How IV and EV relate to premium and moneyness
3. Payoff graphs and net payoff graphs
4. Premium vs. theoretical value

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