Time Value

Filed Under » ,
Dictionary Says

Definition of '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 Says

Investopedia explains 'Time Value'

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

Related Definitions

  • Call

    1. The period of time between the opening and closing of some future markets wherein the prices are established through an auction process.2. An option contract giving the owner the ...
    Read More »
  • Derivative

    A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by ...
    Read More »
  • Expiration Date

    The last day on which an options or futures contract is valid. When an investor buys an option, the contract gives them the right but not the obligation to buy or sell an asset at a ...
    Read More »
    • Intrinsic Value

      1. The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. ...
      Read More »
    • Leverage

      1. The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. 2. The amount of debt used to finance a firm's assets. ...
      Read More »
    • Max Pain

      The point at which options expire worthless. The term, max pain, stems from the Maximum Pain theory, which states that most traders who buy and hold options contracts until expiration ...
      Read More »
    • Option

      A financial derivative that represents a contract sold by one party (option writer) to another party (option holder). The contract offers the buyer the right, but not the obligation, to ...
      Read More »
    • Put

      An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time. The buyer of a put option ...
      Read More »
    • Strike Price

      The price at which a specific derivative contract can be exercised. Strike prices is mostly used to describe stock and index options, in which strike prices are fixed in the contract. ...
      Read More »
    • Premium

      1. The total cost of an option. 2. The difference between the higher price paid for a fixed-income security and the security's face amount at issue.3. The specified amount of payment ...
      Read More »

Articles Of Interest

Partner Links