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How Does a Decrease in Time Value Affect the Price of an OTM Option?

A decrease in time value directly reduces the OTM option's premium.
Greeks.Live22.11.25

How Does a Decrease in Time Value Affect the Price of an OTM Option?

A decrease in time value directly reduces the price (premium) of an Out-The-Money (OTM) option. Since an OTM option's premium is entirely composed of time value, the loss of time value is a direct loss for the option buyer.

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