{"id":1584,"date":"2009-12-24T13:31:39","date_gmt":"2009-12-24T08:01:39","guid":{"rendered":"http:\/\/www.niftylivecharts.com\/blog\/?p=1584"},"modified":"2009-12-24T13:31:39","modified_gmt":"2009-12-24T08:01:39","slug":"what-are-time-premium-in-futures-options","status":"publish","type":"post","link":"https:\/\/www.niftylivecharts.com\/blog\/what-are-time-premium-in-futures-options\/","title":{"rendered":"What are Time Premium in Futures Options?"},"content":{"rendered":"<div id=\"_mcePaste\" style=\"position: absolute; left: -10000px; top: 0px; width: 1px; height: 1px; overflow-x: hidden; overflow-y: hidden;\">Time Premium in Futures Options<\/div>\n<div id=\"_mcePaste\" style=\"position: absolute; left: -10000px; top: 0px; width: 1px; height: 1px; overflow-x: hidden; overflow-y: hidden;\">Definition: Time premium describes the part of an option price that is above the intrinsic value of the option. Typically, the more time remaining on an option, the higher its time premium. The reasoning behind this is that the more time you have on an option, the better chance you have for the underlying futures contract to move in your direction.<\/div>\n<div id=\"_mcePaste\" style=\"position: absolute; left: -10000px; top: 0px; width: 1px; height: 1px; overflow-x: hidden; overflow-y: hidden;\">Option prices are made up of intrinsic value and time premium.<\/div>\n<div id=\"_mcePaste\" style=\"position: absolute; left: -10000px; top: 0px; width: 1px; height: 1px; overflow-x: hidden; overflow-y: hidden;\">The price of an in the money option consists of its intrinsic value plus any time premium.<\/div>\n<div id=\"_mcePaste\" style=\"position: absolute; left: -10000px; top: 0px; width: 1px; height: 1px; overflow-x: hidden; overflow-y: hidden;\">The price of an out of the money option consists only of its time premium &#8211; there is no intrinsic value.<\/div>\n<div id=\"_mcePaste\" style=\"position: absolute; left: -10000px; top: 0px; width: 1px; height: 1px; overflow-x: hidden; overflow-y: hidden;\">More volatile markets will normally have higher time premium than less volatile futures or commodities markets.<\/div>\n<div id=\"_mcePaste\" style=\"position: absolute; left: -10000px; top: 0px; width: 1px; height: 1px; overflow-x: hidden; overflow-y: hidden;\">Also Known As: time value, volatility premium<\/div>\n<p><strong><span style=\"text-decoration: underline;\">Definition<\/span><\/strong><\/p>\n<p>Time premium describes the part of an option price that is above the intrinsic value of the option. Typically, the more time remaining on an option, the higher its time premium. The reasoning behind this is that the more time you have on an option, the better chance you have for the underlying futures contract to move in your direction.<\/p>\n<p>Option prices are made up of intrinsic value and time premium.<\/p>\n<p>The price of an in the money option consists of its intrinsic value plus any time premium.The price of an out of the money option consists only of its time premium &#8211; there is no intrinsic value.<\/p>\n<p>More volatile markets will normally have higher time premium than less volatile futures or commodities markets.<\/p>\n<p>Also Known As: time value, volatility premium<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Time Premium in Futures Options Definition: Time premium describes the part of an option price that is above the intrinsic value of the option. Typically, the more time remaining on an option, the higher its time premium. The reasoning behind this is that the more time you have on an option, the better chance you [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[7],"tags":[4639,2906,4640,43,4641,722,918,4638],"class_list":{"0":"post-1584","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-future-and-options","7":"tag-future-and-option-trading","8":"tag-future-trading","9":"tag-fututres-and-options","10":"tag-nifty-option-trading","11":"tag-nofty-future-trading","12":"tag-option-trading","13":"tag-stock-market","14":"tag-time-premium-in-future-options","15":"entry"},"_links":{"self":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/1584","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/comments?post=1584"}],"version-history":[{"count":0,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/1584\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/media?parent=1584"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/categories?post=1584"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/tags?post=1584"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}