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If an Option Has a $5 Premium and Zero Intrinsic Value, What Is the Time Value?

The time value is $5, as the entire premium is extrinsic value.
Greeks.Live22.11.25

If an Option Has a $5 Premium and Zero Intrinsic Value, What Is the Time Value?

Since the option premium is the sum of intrinsic value and time value, the time value is equal to the premium minus the intrinsic value. In this case, Time Value = $5 – $0 = $5.

The entire premium is time value.

What Is the Difference between Intrinsic Value and Extrinsic Value of an Option?
What Is the Concept of “Extrinsic Value” and How Does It Relate to ITM Options?
Why Is a Deep ‘Out-of-the-Money’ Option’s Premium Composed Entirely of Extrinsic Value?
How Does the Premium Relate to the Intrinsic and Extrinsic Value of an Option?

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