Buying and writing puts Put buyer pays the premium and obtains the right, but not the obligation to sell the underlying asset at the exercise price until the expiration date. An American option can be exercised by its holder at any time up to the expiration date. The intrinsic value of an option is the profit the option holder would make if he decided to exercise his option immediately. It is always positive. If the figure is positive.
Intrinsic value is equal to zero.
At expiration, the time value is necessarily equal to zero, i.e. the premium equals the option's intrinsic value. The longer the time to expiration, the higher the time value. However, time is not the only factor affecting the time value of an option. All other factors remaining equal, the value of an option is lower the closer the expiration date. The loss of time value is faster as the expiration date approaches.