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What Is the Maximum Value of an Option’s Time Value?

The maximum time value occurs when the option is At-The-Money.
Greeks.live05.12.25

What Is the Maximum Value of an Option’s Time Value?

The maximum time value of an option occurs when it is At-The-Money (ATM). At this point, the uncertainty of the final price is highest, maximizing the time value component.

The actual dollar amount depends on factors like implied volatility and time to expiration.

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Glossar

Time Value of an Option

Extrinsic ⎊ This represents the portion of the option's premium that is not derived from immediate intrinsic value, instead reflecting the potential for future favorable price movement.

Time Value

Duration ⎊ The temporal dimension inherent in cryptocurrency derivatives, options trading, and financial instruments fundamentally defines time value.

Maximum Value

Threshold ⎊ This denotes the upper boundary of a variable, such as the highest price or notional amount, that a system or contract is designed to handle or process within defined operational parameters.

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