OptAura logoOptAura
All lessonsLesson 9 · Step 1/6

Premium & the Greeks

What you're paying for

An option's price (the premium) = intrinsic value + time value.

Intrinsic value: real, exercise-now value. A $575 call with SPY at $580 has $5 of intrinsic value.

Time value: the extra amount buyers pay for the possibility of a bigger move. It melts away as expiration approaches — this is time decay.

No progress saved yet