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Glossary Term: TIME VALUE

Definition(s) for TIME VALUE:


1. ) The amount of money option buyers are willing to pay for an option on the anticipation that, over time, a change in the underlying futures price will cause the option to increase in value. In general, an option premium is the sum of time value and intrinsic value. Any amount by which an option premium exceeds the option's intrinsic value can be considered time value.

2. ) The portion of an option's price or premium that is attributable to the amount of time remaining until it expires. The longer an option has until it expires, the more opportunities its price has to fall MONEY.htm'>in-the-money. Time value is in addition to intrinsic value, which is the amount by which the option is MONEY.htm'>in-the-money.

3. ) The portion of the option premium that is attributable to the amount of time remaining until the expiration of the option contract. Time value is whatever value the option has in addition to its intrinsic value.

4. ) The part of an option's total price that exceeds its intrinsic value. The price of an out-of-the-money option consists entirely of time value.

5. ) Time value is the intrinsic value subtracted from the market price. Time value represents the remaining value that has been attributed to the warrant by the market, and the fact that the market might move before the expiry date.



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