What Is the Relationship between the Strike Price and the Expiration Date on an Option’s Time Value?

The time value (extrinsic value) of an option is positively correlated with the time remaining until expiration. A longer time to expiration means more time for the underlying asset's price to move favorably, increasing the option's potential to become ITM.

The strike price's distance from the current market price determines the option's moneyness, which influences the magnitude of the time value, as OTM options have only time value.