time value

time value definition - business

time value

The portion of an option premium in excess of the option's intrinsic value. For example, a call option that allows the holder to buy 100 shares of a $25 stock for $20 (the strike price) has an intrinsic value of $500. The time value is $150 if the option trades for $650.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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