Time Value
The portion of an option premium that exceeds its intrinsic value; synonymous with extrinsic value.
Explanation
Time value reflects the possibility that the option could become more valuable before expiration. It is influenced by time remaining, implied volatility, and moneyness. ATM options have the most time value. Time value decays to zero at expiration.
Example
An AAPL 150 call is priced at $7 when AAPL is at $153. Intrinsic value is $3, so time value is $4.