Extrinsic value
The part of an option's price above its intrinsic value. It reflects time to expiration and implied volatility, and it shrinks toward zero at expiration.
Extrinsic value, also called time value, is what a buyer pays for the possibility that the option gains intrinsic value before it expires. Its main inputs are the time left until expiration and the implied volatility priced into the option.
It is greater for at-the-money options than for options with strikes far from the underlying price, and it declines as expiration approaches, a decay measured by theta. A drop in implied volatility also lowers it, which is the mechanism behind IV crush.
Illustrative example (hypothetical numbers, not a real trade): with a stock at $100, a $95 call trades at $7.50. Its intrinsic value is $5.00, so its extrinsic value is $2.50, or $250 per contract. If the stock is still at $100 at expiration, the call is worth $5.00 and the $2.50 of extrinsic value is gone.