The part of an options premium which reflects the excess over the intrinsic value, or which may reflect the entire premium if there is no intrinsic value. A call option for 60cts/gal oil in a 58cts/gal market that is trading at a premium of 2cts/gal would represent a case where the entire premium is attributable to time value. Time value generally declines as an options contract nears expiration; it can represent the lion’s share of the premium at great distances from expiration.