Consider a hypothetical example in which the price of the underlying asset is 10,000 yen and a call option (call) with a strike price of 9,500 yen has a premium of 700 yen. The intrinsic value is 500 yen and the time value is 700 − 500 = 200 yen. For an option with zero intrinsic value, the whole premium is time value. Time value does not fall at a constant pace; it falls faster just before expiry.
Time value
- Japanese
- 時間的価値
- Last reviewed
- September 25, 2026
This is a draft, shown for review before publication.
Time value is the part of an option's premium above its intrinsic value, and it is the value of the expectation that the price of the underlying asset will move in a favorable direction before expiry. It tends to be larger the longer the time to expiry and the higher the volatility, and it falls as expiry approaches.