Define ‘Time Value’ of an Option.
Time Value, or Extrinsic Value, is the portion of the option's premium that exceeds its intrinsic value. It represents the probability that the option will move further In The Money before expiration.
Time Value is influenced by the time remaining until expiration and the volatility of the underlying asset. It decays over time, a concept known as Theta decay.
Glossar
Time until Expiration
TimeHorizon ⎊ Time until Expiration, or Time to Maturity, is the remaining duration until an options contract reaches its conclusion and its intrinsic value must be determined or the right forfeited.
Time Value
Component ⎊ Time value, also known as extrinsic value, is a component of an option's premium that reflects the probability of the underlying asset's price moving favorably before the option expires.