How Does a Longer Time to Expiration Increase an Option’s Premium?
A longer time to expiration increases the option's time value because there is more opportunity for the underlying asset's price to move favorably, potentially making the option in-the-money. This increased probability of a profitable outcome makes the option more valuable to the buyer.
The effect is especially pronounced for options with high volatility.
Glossar
Longer Expiration
Horizon ⎊ Options contracts with a longer expiration date provide the holder with the right, but not the obligation, to execute a trade further into the future, extending the investment horizon.
Longer Time to Expiration
Duration ⎊ Longer time to expiration in cryptocurrency options signifies a protracted period until the contract’s settlement date, influencing pricing models and risk profiles.