timetomaturity

Time to maturity (TTM) is the amount of time remaining until a financial instrument reaches its maturity date. It is a fundamental horizon used in valuation, risk management, and liquidity analysis. TTM is typically expressed in years or days, depending on the precision required and the conventions of the instrument.

In fixed-income securities, TTM is the difference between the instrument's stated maturity date and the current date. For some instruments, day-count conventions (such as ACT/365 or 30/360) determine the precise measure. For options and other derivatives, time to maturity refers to the time until the contract's expiry; it is a core input in models like Black-Scholes and affects time value.

TTM influences pricing and risk: longer TTM generally increases a security's sensitivity to interest-rate changes (higher duration and convexity) and can raise the time value of options. For bonds with embedded options or prepayment features, the realized cash flows depend on movements in issuer behavior, so the horizon to final payment can dynamically change. Yields quoted to maturity assume holding to the stated maturity, while the actual TTM declines as time passes.

Practically, investors use TTM to compare instruments with different maturities, manage rolling maturities, and align hedges. As time passes, TTM shortens, which can systematically affect price, risk metrics, and the appeal of certain investments. In loan portfolios, TTM reflects the remaining amortization schedule and credit exposure.