Derivatives
Time Value
Definition
What is Time Value?
The part of an option premium exceeding intrinsic value, reflecting time and uncertainty before expiration.
Example in practice
How This Looks in Practice
A call worth ₦13 with ₦10 intrinsic value has ₦3 time value.
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Related Terms
Derivatives
Derivative
A contract whose value depends on an underlying asset, rate, index, or event.
DerivativesUnderlying Asset
The asset, rate, index, or reference on which a derivative's value is based.
DerivativesNotional Amount
The reference amount used to calculate derivative payments, which may exceed the cash initially exchanged.
Derivatives StrategiesCovered Call
A strategy that owns the underlying asset and sells call options against it.