Time Value (Extrinsic Value) Time Value (Extrinsic Value)
The portion of an option's value, which exists because the option has not yet expired. Its magnitude depends on the amount of time left to expiration and the volatility of the market for the underlying currency. As time passes, given a constant volatility and underlying currency price, the time value of an option diminishes to zero by expiration date. Time value is the amount by which an option's total premium exceeds its intrinsic value.