What is Time Value?
Time Value (also called extrinsic value) — The part of an option’s premium above its intrinsic value, reflecting time to expiry and volatility. It decays to zero at expiry.
In simple terms
An OTM option is all time value, which theta erodes daily.
Why Time Value matters when you invest
Understanding time value helps you make better-informed decisions when you invest and trade on ROAR by DP TradeKING. Open a free account to put it into practice — ₹0 delivery brokerage and zero-commission direct mutual funds.
Time Value — frequently asked questions
What is Time Value?
The part of an option’s premium above its intrinsic value, reflecting time to expiry and volatility. It decays to zero at expiry.
What does Time Value mean in the stock market?
The part of an option’s premium above its intrinsic value, reflecting time to expiry and volatility. It decays to zero at expiry. An OTM option is all time value, which theta erodes daily.
Can you give an example of Time Value?
An OTM option is all time value, which theta erodes daily.
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