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This is just a mock transaction that I'd like to use for learning the relevance of time value.

.UIEBA VIAC FEB 2006 5 Call
bid = .8
ask = 1.2
Current Underlying Price: $5.59

I bought the option at 1.2 so I am down the spread, or $40. The current market value for the option is $80 (100 X .8). This option is in the money but worthless. Why is this happening? Just mainly because no buyers are stepping up to the current 1.2 bid?

If the underlying were to rise to $6.00 by tomorrow, what affect would it have on this option...if any?

Also, how does time value figure into any of this? Or, what is a scenario in which time value will add value to this option?

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