There is some valuable intuition in that the value of an option can be broken into three components, the intrinsic value - that is the difference between the as

There is some valuable intuition in that the value of an option can be broken into three components, the intrinsic value - that is the difference between the asset price and strike price on the option, the time value which is dependent on the time to expiry and the risk free rate, and the “insurance” value which is dependent on the volatility and the time to expiry. In the swaptions market, for instance quotes are typically for an “at-the-money forward” rate, which makes the first two components zero and all the value is tied to the vol.