Definition
The portion of an option's premium that exceeds its intrinsic value, based on time until expiry.
Understanding Time Value
Time Value is an important concept in stock market trading. Understanding this term will help you make better trading decisions and communicate effectively with other traders and financial professionals.
Key Points
- Basic Definition: The portion of an option's premium that exceeds its intrinsic value, based on time until expiry.
- Category: This term is commonly used in Derivatives
- Relevance: Essential knowledge for traders operating in Indian stock markets
Practical Example
When trading on NSE or BSE, you'll encounter time value regularly. For example, understanding this concept helps you analyze market conditions, make informed decisions, and manage your trading positions effectively.
Related Concepts
To fully understand time value, you should also be familiar with related trading concepts. Check out the related terms in the sidebar for a comprehensive understanding of this topic.