Extrinsic value is the difference in an Option's price and its Intrinsic Value. It is comprised of volatility premium and time premium.
Example: Let's say you are looking at the GS 140 Call. The price of the Call is 4.35. GS stock is trading at 143.00. This means there is 3.00 in Intrinsic Value (143-140), which means there is 1.35 in Extrinsic Value (4.35-3.00). The 1.35 represents the amount of time premium that is left before the Option expires coupled with the amount of volatility premium that is priced into the Option.
Extrinsic Value is solely related to Options Trading. It does not relate to Stock Trading, and loosely relates to Futures Trading.
Related terms: Implied Volatility, VIX, Call, Put