What Is the Main Component of the Premium for a Deep OTM Option?

The main component of the premium for a deep Out-of-the-Money (OTM) option is extrinsic value (or time value). Since the option has little to no intrinsic value, its price is almost entirely derived from the time remaining until expiration and the implied volatility.

This extrinsic value reflects the small chance that the underlying price could move enough for the option to expire In-the-Money.