Black Scholes Model: Time to maturity

mikeworld1976

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what is the impact of time to maturity on put option and call option values? Couldn’t understand much.
 
As Time Decay increases, ie you are getting CLOSER to expiration, the value of BOTH calls and puts decrease, only exception is with European puts deep in the money - where value can increase.
Think of it this way, as time ticks, if you’re not already in the money, you’re only coming closer to the end. You want more time on your side so you can potentially get in the money. The only exception is European options where unlike American options, you have to wait till maturity to realize the gains. BUt if you’re so deep in the money, you’d rather the option just expire NOW so you can realize the gain now.
 
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