If the BTC Call Premium in the Example Is $3,500, What Is the Time Value?

In the example, Bitcoin's price is $45,000, and the Call strike is $42,000, giving an intrinsic value of $3,000. The option premium is $3,500.

Using the formula: Premium = Intrinsic Value + Time Value, the time value is $3,500 – $3,000 = $500. This $500 is the extrinsic value the market is paying for the chance of the price moving higher before expiration.