What is time value? - ProProfs Discuss
Advertisement

What is time value?

Asked by Jimmy betancourt, Last updated: Sep 03, 2021

+ Answer
Request
Question menu
Vote up Vote down

4 Answers

Deepak kumar Goyal

Deepak kumar Goyal

Face the challengeges to grow in life.

Deepak kumar Goyal
Deepak kumar Goyal, Territory executive, D. Pharma, Patiala

Answered Sep 03, 2018

In general option premium is the sum of time value and intrinsic value.

upvote downvote
Reply 

Deepak kumar Goyal

Deepak kumar Goyal

Face the challengeges to grow in life.

Deepak kumar Goyal
Deepak kumar Goyal, Territory executive, D. Pharma, Patiala

Answered Sep 03, 2018

Buyers pay time value because they expect the option premium to increase in future due to an anticipated change in the price of the underlying future contract.

upvote downvote
Reply 

Deepak kumar Goyal

Deepak kumar Goyal

Face the challengeges to grow in life.

Deepak kumar Goyal
Deepak kumar Goyal, Territory executive, D. Pharma, Patiala

Answered Sep 03, 2018

In finance the time value of option is the premium a rational investor would pay over its current exercise value.

upvote downvote
Reply 

John Smith

John Smith

John Smith
John Smith

Answered Sep 08, 2016

Time value is the monetary value that investors are willing to pay to own an option based on the amount of time left between the purchase date and expiry date. if you want to buy an option that has 3 months to expiry and is $5 out of the money versus an option that has 3 days to expiry and is $5 out of the money, you will place a higher value on the 3 month option. reason: there is more time for the 3 month option to turn into a profit. the option with only 3 days to expiry has a slim chance, so the time value on that 3 day option would be very low.
upvote downvote
Reply 

Advertisement
Advertisement
Search for Google images Google Image Icon
Select a recommended image
Upload from your computer Loader
Image Preview
Search for Google images Google Image Icon
Select a recommended image
Upload from your computer Loader
Image Preview
Search for Google images Google Image Icon
Select a recommended image
Upload from your computer Loader

Email Sent
We have sent an email to your address "" with instructions to reset your password.