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Time Value

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Financial Dictionary

Time Value

The portion of the option premium that is attributable to the amount of time remaining until the expiration of the option contract.

Investopedia Commentary

Basically, time value is the value the option has in addition to its intrinsic value.

Related Links

The Importance of Time Value

See also: Call, Derivative, Expiration Date, Intrinsic Value, Leverage, Max Pain, Option, Put, Strike Price

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Financial Dictionary

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.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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