Explain why an options time value is greatest

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Explain why an option's time value is greatest when the stock price is near the exercise price and why it nearly disappears when the option is deep-in- or out-of-the-money?

Critique the following statement, made by an options investor: "My call option is very deepin-the-money. I don't see how it can go any higher. I think I should exercise it."

Reference no: EM131326123

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