Is Negative Time Value Possible?

[r4messne]

Hello,

I am looking at a sweet crude option. If the spot price is 107.52 and the strike price is 100 then my intrinsic value is 7.52. If the cost of the option is 6.76 my Time value is -0.76. What does this mean? Am I missing something? Any thoughts on this scenario would be greatly appreciated.

 

[Martinghoul]

Your option is not on spot, but rather on a futures contract. To calc the intrinsic & time values you need to use the futures px, rather than spot. Futures are lower than spot, et voila.

 

[jotekfinance]

Thanks for that Martinghoul. I was wondering as well.