Chapter 03 · Section 3.1

The Time Value of an Option

  1. 1The components of the premium
  2. 2Long Call Option Value
  3. 3The time value of an option
  4. 4Influence in the time value-Summary
  5. 5Pricing summary
  6. 6The Time Value of an Option
  7. 7Time Remaining Before Expiration
  8. 8The time value of a put option 1
  9. 9The time value of a put option 2
  10. 10Long Put Option Value
  11. 11Option maturity
  12. 12Minimum vs. Intrinsic Value

Options, especially American options, are usually quoted at a price higher than their intrinsic value. This is because of the opportunity for the price of the underlying asset to rise or to decline before maturity.