The star winger has only two years left on his current contract, after signing a five-year deal when Wolves paid £18million for him in 2018.
Traore has been in negotiation with the club for some time, with an offer being on the table for a year.
Former manager Nuno Espirito Santo revealed in May, just before he left the club, that he expected Traore to commit his future to Wolves but talks later stalled as the Spanish attacker was holding out for improved terms.
Talks between all the relevant parties, for the most part, have continued to take place and Traore is now set receive a new and improved offer as Wolves attempt to fend off interest in him.
Tottenham Hotspur, and former boss Nuno, tried to lure Traore to London this month and made two offers to sign him, both of which were well below what Wolves value him at.
But with only two years left of his contract, Wolves may be forced to cash in on him if they cannot agree new terms.
As a result, the club are aiming to reignite talks with the forward and put a new and improved offer on the table.
It is understood Traore was keen to continue his Wolves journey when talks began, but that he wanted a bigger offer. He seems to be enjoying football under new boss Bruno Lage, too, with the far more attacking approach getting the best out of the 25-year-old.
After Wolves failed to add significant depth to the squad in the transfer window – with Hwang Hee-chan coming in as attacking competition last week – the club will be keen to keep Traore, who has made an impressive start to the season. But if they fail to extend his contract and the right offer comes in for him, he could still depart before his deal ends to avoid losing him on a free transfer.
Wolves have moved on other players for profit under owners Fosun and they will continue that model if Traore does not commit his future to the club in the long-term.