A call option is the right to buy an underlying asset without the obligation to buy. The seller of the call option has an obligation to sell at the agreed price and on the agreed date by charging a price for selling the right to the buyer known as option price or the option premium.
The intrinsic value is simply calculated by subtracting the market price from the strike price – representing the profit the holder of the option would book if they exercised the option, took delivery of the underlying asset, and sold it in the current market.
The time value is then calculated by subtracting the intrinsic value of the option from the option premium.