Time value refers to the portion of an option's premium that is attributable to the amount of time remaining until the expiration of the option contract. The premium of any option consists of two components: its intrinsic value and its extrinsic or time value.

Time value an option's extrinsic value, and is impacted by implied volatility (IV), and relates to derivatives markets. It should not be confused with the time value of money (TVM), which describes the discounting of money's purchasing power over time.