time value

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Related to time value: Time value of money

Time value

Applies to derivative products. Portion of an option price that is in excess of the intrinsic value, due to the amount of volatility in the stock; sometime referred to as premium. Time value is positively related to the length of time remaining until expiration.

Time Value

1. See: Option time value.

2. See: Time value of money.

3. See: Extrinsic value.

time value

The portion of an option premium in excess of the option's intrinsic value. A call option that allows the holder to buy 100 shares of a $25 stock for $20 (the strike price) has an intrinsic value of $500. The time value is $150 if the option trades for $650.
References in periodicals archive ?
intrinsic value of the warrants and adding the time value as at the most
20) Each bar in the display is a probability distribution of the investor's after-tax dollar value after 10 years (21) and represents a different ratio of time value to total value at the time of exercise; the ratios of time value to total value decrease from left to right, with the bar on the far right representing a time value of zero.
Time value adjusts the basis of the acquired commodity, affecting margin.
The after-tax time value of money is a favorable factor for postponing purchases.
Several mathematical models have been developed to estimate the time value of options.
Time value is the sum of money buyers are willing to pay for an option over and above any intrinsic value the option may presently have.