What is time value?
Time value is a term used in options trading to refer to the portion of an option’s premium that is attributable to the amount of time left until the option expires. An investor will pay more for an option with a longer time until expiry, because this increases the time available for an option to expire in the money.
When trading options, the premium is determined by the option’s time value, plus its intrinsic value. An option will not have an intrinsic value until the underlying price has exceeded the strike price. If an option is out of the money and the expiry date is approaching, the option is likely to never have an intrinsic value.