Option basics · Lesson 06 of 9 · Concept
Intrinsic value and time value
An option premium is intrinsic value plus time value. Intrinsic value is what exercising is worth right now; time value is what the market charges for the chance it improves. At 15:30 on 22 September 2026 every NIFTY contract settled at intrinsic value alone — the 23,300 call at ₹29.00, matching the 29 points to the close.
NIFTY weekly expiry, 22 September 2026 · MarketCue one-minute option-chain capture
Splitting a premium in two
At the open on 22 September, NIFTY stood at 23,460 and the 23,300 call traded at ₹189.40. Exercising it at that moment was worth 160 points, so ₹160 of that premium was intrinsic and the remaining ₹29.40 was time value — what the market charged for the hours still to run.
The 23,400 call the same morning traded at ₹100.50 with 60 points of intrinsic value, leaving ₹40.50 of time value. The 23,550 call traded at ₹17.85 with no intrinsic value at all: the entire premium was time value.
One of the two has a deadline
By 15:30 the time-value component of every contract on the board had gone to zero. The 23,300 call settled at ₹29.00 against a close of 23,329 — intrinsic value exactly, with nothing added. The 23,550 call, whose price had been time value in its entirety, settled at ₹0.05.
This is why a contract with no intrinsic value is a different instrument from one that has some. The first is a claim on a level being reached; the second is a claim on a level already reached, plus a diminishing extra. The rate at which that extra drains is covered under theta.
Common questions
What is time value in an option?
Time value is the part of an option premium above its intrinsic value — what the market charges for the possibility that the option improves before expiry. It falls to zero at expiry, leaving only intrinsic value.
How do you calculate intrinsic value?
For a call it is the underlying level minus the strike, floored at zero. For a put it is the strike minus the level, floored at zero. Anything in the premium above that figure is time value.
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How these figures are produced
Every price on these pages was traded on the exchange and is read from our own option-chain capture, which records the NIFTY and SENSEX chains once a minute through the session. Each page names the session its figures come from.
Figures that a model produced rather than the market — the Greeks, implied volatility — are labelled as model outputs wherever they appear, and never presented beside traded prices without saying which is which. The pricing is checked against published reference values on every change.
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