He must understand that a November option will expire in October 1 not November. Due to the uncertainty of corn harvest, a producer may decide to use a January option rather than a November option. NebGuide G85-769 entitled Options Contract Specifications on Grain Futures Contracts . In most literature, time value is the more common term. Time value is an eroding asset and will generally approach zero as the life of an option contract nears the expiration date.
Time value decreases simply because there is no longer time remaining.
Options are exercised against specific futures contracts. The price of a specific futures contract being traded. A put option has intrinsic value if the strike price is above the futures price. The initial deposit made by writers and sellers to establish a margin account for the underlying futures contract. If the market moves against the futures contract, margin money is taken from the margin account.