What is the time value of an option?

Time Value of an Option - What Is It?  One of the key components of an options trade is its premium, i.e., the monetary amount paid by the buyer to the seller. Its size depends on the level of risk assumed by the seller. In economics, everything is measurable, and even risk can be calculated and given an exact price. For this, several models for calculating the premium were created in the options market, the most popular of which uses values such as the intrinsic and time value of the option.