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If an Option’s Premium Is $500 and Its Intrinsic Value Is $300, What Is Its Time Value?

Time Value = Premium - Intrinsic Value; the time value is $200.
Greeks.Live22.11.25

If an Option’s Premium Is $500 and Its Intrinsic Value Is $300, What Is Its Time Value?

The option's premium is the sum of its intrinsic value and its time value (extrinsic value). Therefore, the time value is calculated by subtracting the intrinsic value from the total premium.

In this case, the time value is $500 (Premium) – $300 (Intrinsic Value) = $200.

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