Time value

Time value comprises that part of an option?s price that reflects the option?s remaining lifetime. The longer the remaining lifetime, the higher the option price. This is due to the amount of time which still remains; during which the price of the underlying instrument can rise or fall (the rule stated here may not apply to certain deep-in-the-money puts).

Literatur:

Bloss, Michael; Ernst, Dietmar; Häcker, Joachim: Derivatives, 283 Seiten, 2008
[Dieser Titel bei Oldenbourg]