Time value of an option

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Time value of an option

The portion of an option's premium that is based on the amount of time remaining until the expiration date of the option contract, and the idea that the underlying components that determine the value of the option may change during that time. Time value is generally equal to the difference between the premium and the intrinsic value. Related: In the money.

Time Value of an Option

The portion of the value of an option determined by the amount of time until it expires and the likelihood that it will be in the money at that time. The time value of an option is generally calculated as the difference between the premium and its intrinsic value. See also: Time value of money.