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Time value




The amount by which the current market price of an option exceeds its intrinsic value.

The intrinsic value of a call is the amount by which the market price of the underlying security exceeds the strike price at which the option may be exercised. The intrinsic value of a put is calculated as the amount by which the market price of the underlying security is below the exercise price.

Related Terms:

Intrinsic Value
This is a measure of any real value to the option. The amount by which an ...

Out of the Money
Refers to an options contract that has no intrinsic value; for instance, a call option whose ...

In the Money
(ITM) If you were to exercise an option and it would generate a profit at the ...





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