WASTING ASSET

A term often used to describe an option because of its limited life. Shortly before its expiration, an out-of-the-money option has only time value, which declines rapidly. For an in-the-money option, only intrinsic value is left upon expiration. For futures options, this is either automatically exercised or cashed out. At the end of its life, an option that has no intrinsic value becomes worthless; i.e., it wastes away.