| Here the call is OTM, so there is no intrinsic value. The option's price is comprised purely of time value, of which there is $1.00. | The stock price has gone up by $1.00, moving toward the option's strike price. The option is now at-the-money (i.e., stock price = strike price), and it has an elevated level of time value. An option always has the most time value when it's at-the-money. | The stock price is now at $36, which is above the $35 strike price. The stock price has moved away from the strike price. As such, time value begins to decrease as compared to the amount of time value at-the-money. |
