An option's time value is greatest when it is 'at-the-money'.

Name: An option's time value is greatest when it is 'at-the-money'.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

This is because options that are at-the-money have the highest level of uncertainty and volatility, leading to a higher potential for the option to move further into the money before expiration. As a result, the time value component of the option is highest when it is at-the-money.

An Option's Time Value Is Greatest When It Is 'At-The-Money