What is the time value?

The time value refers to a part of any bonus optia that is directly related to the amount of time remaining between the current date and the expiry date assigned to the order or option contract. Time value, sometimes referred to as Time Premium . The calculation of the time value is one of the tools used to assess the feasibility of purchasing a given option contract.

The estimated time value is calculated at the time of purchase. In essence, this provides an investor's good idea of ​​what can be expected in the method of return on investment if the relevant market conditions remain stable. From time to time, you can also calculate from the current date. This helps the investor to monitor the rate of return, which can be expected for any period of time until the end.

Since time value is to do with the value of possibilities because they relate to current circumstances, the calculation for investors can be a great way to find out if they really want to continueWhether in the given option as to the expiration date. If the investor finds that the option on the option does not meet expectations, then he may decide that he will not be able to mature. At the same time, the time value may indicate that the possibility is above expectations, indicating that hanging on the option is a smart move.

Assessment of the time value of options and guaranteeing from time to time is simply a sound investment policy. The process can be used as one indicator of how to organize investments for the best advantage. However, a simple calculation of time value is usually not the only factor that the investor will consider. Other indicators, such as the upcoming political elections, TestAposuny TED, which will affect the whole market, and even the potential of natural disasters can also affect the decision to hang or sell the optical contract.