Intrinsic Value is the difference between the underlying asset’s price and the strike price of the option. For a call option, it’s calculated as the underlying price minus the strike price. For a put option, it’s the strike price minus the underlying price.

Time Value is the portion of the option premium that exceeds the intrinsic value. It’s influenced by time left until the option’s expiration, volatility of the underlying asset, and risk-free interest rate. As the expiration date approaches, time value declines or “decays”, a process known as time decay.

– Reference: [Investopedia: Understanding Intrinsic Value and Time Value](https://www.investopedia.com/articles/optioninvestor/05/062705.asp)