How Does Increasing Time to Expiration Affect the Extrinsic Value of an Option?

Increasing the time to expiration significantly increases the extrinsic value (or time value) of an option. This is because a longer time horizon means there is a greater probability for the underlying cryptocurrency's price to move favorably, potentially making the option 'in-the-money'.

Since extrinsic value represents the potential for future price movement, more time equals more potential, thus a higher premium. This relationship is non-linear, with the rate of decay accelerating closer to expiration.