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Strategies & Market Trends : Options
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To: edamo who wrote (2336)2/7/2000 1:17:00 PM
From: Bridge Player  Read Replies (1) of 8096
 
<< "time value" is purely determined by the time remaining till expiration, the decay is not linear and
can be calculated simply. volatility, implied or historical is not a component of time >>

Not quite accurate. Time value is simply the total option price for an out-of-the-money option since it has no intrinsic value.

Again, to quote the CBOE:

"Time value
The portion of the option premium that is attributable to the amount of time remaining
until the expiration of the option contract. Time value is whatever value the option has in addition to its intrinsic value."

This is not my definition, edamo, it is the CBOE's. If you don't particularly care for their definition I suggest you take it up with them.

My guess is that the thread is bored by this exchange, so I will post no further on this topic.

BP
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