How Time Value Affects Options

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How Time Value Affects Options

When referring to option pricing, time value is the amount an individual is willing to pay for the uncertainty that an option will complete in-the-money, or ITM. The more of a chance the option will not finish ITM, the higher an option’s time value. However, if the chance of the option finishing ITM is almost certain, and even expected, the time value will be much lower.

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