▌ACADEMY://options-basics · lesson 2/4

Why Option Prices Move: Time Value & IV

+125 XP

What you are paying for

1/7

premium = intrinsic value + time value

Intrinsic value: what the option would be worth if it expired right now. A $100 call on a $108 stock has $8.
Time value: everything else. The price of "it could still move". It shrinks to zero at expiry.

Educational content, not financial advice. Charts in lessons use made-up data.

Reading as a guest. Lessons and games are free; an account saves your progress and pays quiz XP.