What does time value represent in an option premium?
1. It represents how many days left until maturity.
2. It represents the difference between the option's premium and the option's intrinsic value.
3. It represents the volatility and uncertainty of the price of the underlying security.
4. It represents the spread that the option's market maker demands for acting as the market maker.
a. 1 and 2.
b. 1 and 4.
c. 2 and 3.
d. 3 and 4.
