Why Do DITM Options Have Less Time Value than ATM Options?
DITM options have less time value because the probability of the underlying price reversing to make the option OTM is low. Most of their value is already intrinsic.
ATM options, however, have a high probability of moving either ITM or OTM, making the uncertainty (time value) component higher.
Glossar
DITM Options
Valuation ⎊ Deep-in-the-money options, within cryptocurrency derivatives, represent contracts where the underlying asset’s price significantly exceeds the strike price, resulting in a substantial intrinsic value.
Time Value
Component ⎊ Time value, also known as extrinsic value, is a component of an option's premium that reflects the probability of the underlying asset's price moving favorably before the option expires.