Time Value

What is Time Value?

Time Value meaning That portion of an option’s premium that exceeds the intrinsic value. The time value of an option reflects the probability that the option will move into-the-money. Therefore, the longer the time remaining until expiration of the option, the greater its time value. Also called Extrinsic Value.

 

reference: U.S. COMMODITY FUTURES TRADING COMMISSION – CFTC Glossary