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Options Foundations — Time Value & Intrinsic Value
Every option premium has two components: intrinsic value (how deep in-the-money the contract is) and time value (the remaining probability premium before expiration). This module explains how each component is calculated, why time value decays non-linearly as expiration approaches (theta decay), how implied volatility inflates and deflates the time component, and why this knowledge is the core of almost every professional options selling strategy.
⏱ 16 minModule D1.4
// What you'll learn
- Every option premium has two components: intrinsic value (how deep in-the-money the contract is) and time value (the remaining probability premium before expiration).
- This module explains how each component is calculated, why time value decays non-linearly as expiration approaches (theta decay), how implied volatility inflates and deflates the time component, and why this knowledge is the core of almost every professional options selling strategy.
// Full access
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