What is Time value in FRM Part 1?

The portion of an option premium above intrinsic value attributable to remaining uncertainty and optionality. Time value is generally greatest near the money and tends toward zero as expiration approaches.

Time value

FRM Part 1 glossary · Financial Markets And Products

Definition

The portion of an option premium above intrinsic value attributable to remaining uncertainty and optionality.

Time value in plain English

Time value is generally greatest near the money and tends toward zero as expiration approaches.

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Practice Time value

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Related FRM Part 1 terms

Arbitrage
Backwardation / Contango
Barrier option
Central counterparty (CCP)
Cheapest-to-deliver (CTD)
Convenience yield
Conversion factor
Cost of carry
Covered interest rate parity
Forward rate agreement (FRA)

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