While brushing up on my knowledge about the Greeks, I have been struggling coming up with an intuitive, probability-based explanation behind why not only Out-of-the-Money (OTM), but also In-the-Money (ITM) options have low Time/Extrinsic values.
For deeply OTM calls (for example), I can see why the Time Value would be low, because there is an extremely low probability of the underlying's price moving so much as to make the call ITM again. However, this is where my present intuition clearly fails, because when a call is deeply ITM, wouldn't it's Time Value actually be high, since the probability of its underlying's price staying within the ITM zone is high?
I feel like this stack post was getting at the answer, but didn't fully elaborate it.
Would someone be able to explain why OTM + ITM options have low Time Values, or at least discern which facets of basic option pricing I am not grasping?
Thank you in advance.