Time value is the part of an option’s premium attributable to the time left until expiration — more time means more chance to profit, so more value. It’s the core of extrinsic value.

How it works

With more time to expiration, there’s more opportunity for the underlying to move in your favor — so the option is worth more. As time passes, that opportunity shrinks, and time value decays (theta), accelerating into expiration. At the bell, time value is zero — only intrinsic value remains.

Why it matters

Time value is what you pay (as a buyer) and collect (as a seller). It’s why longer-dated options cost more and why 0DTE options are cheap but decay in hours. Racing time value’s decay is the central challenge of buying short-dated options.

Time value is the worth of the clock — and the clock only runs one way. It’s the buyer’s cost and the seller’s income.

The takeaway

Time value is the time-based part of an option’s price, decaying to zero by expiration (the essence of extrinsic value and theta). On 0DTE it’s fleeting — which is why 0DTE is a fast, time-pressured game.