The 25-year-old made the move to Wanda Metropolitano from Udinese in July 2022, and he has impressed during his time with the Spanish outfit, scoring six goals and registering six assists in 51 appearances.
Molina scored four goals and registered four assists in 43 outings for Diego Simeone's last term, while he has managed two goals and two assists in eight appearances during the 2023-24 campaign.
Barcelona allegedly made an attempt to sign the right-back during the recent transfer window, but Atletico made it clear that the Argentina international was not for sale.
Arsenal and Manchester City have also been credited with an interest in Molina, with the pair both believed to be keen to bring him to the Premier League at some stage in the near future.
However, according to Marca, Atletico are working to extend Molina's deal beyond 2027, and the club are growing in confidence when it comes to his future.
The report claims that the Red and Whites are also keen to raise his release clause, which currently stands at €90m (£77.4m), to further strengthen their position.
Molina represented Boca Juniors ahead of a switch to Udinese, and he impressed during his time with the Italian club, scoring 10 goals and registering 10 assists in 68 appearances.
The Argentine has shown his versatility of operating as both a right-back and a right-sided wing-back this season, finding the back of the net against Rayo Vallecano and Cadiz.
Molina is also a vital player for his country, featuring against Paraguay during the October international break, but he was not in the squad against Peru last time out.
Speaking towards the end of last season, Simeone lavished praise on Molina, claiming that he is 'what the team went looking for'.
"Molina is what we went looking for. It's what we had seen, he has arrival, goal, assists, route... There are very few who can play on the entire wing like him. With a lot of work he is earning his place. He feels strong," the head coach told reporters at the time.
Atletico will be bidding to make it six straight wins in all competitions when they resume their La Liga campaign away to Celta Vigo on Saturday night.