An option's time premium rises as the option approaches expiration.

Name: An option's time premium rises as the option approaches expiration.
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Question

An option's time premium rises as the option approaches expiration.​

Quizplus · Accepted Answer

The time premium of an option decreases as the option approaches expiration. This is because the option has less time to potentially move in the desired direction, reducing the likelihood of the option becoming profitable by expiration.

An Option's Time Premium Rises as the Option Approaches Expiration