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What is time value of the option?

option time value
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What is time value of the option?

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Time Value = Option Price – Intrinsic Value Lets take an example: If stock XYZ is trading at Rs 105 and the XYZ 100 call option is trading at Rs 7, Intrinsic value = 105 – 100 = 5 Time Value = 7 – 5 = 2 So, we would say that this option has time value = Rs 2

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