Can an Option Have Negative Intrinsic Value? ⎊ Path

Can an Option Have Negative Intrinsic Value?

No, an option cannot have negative intrinsic value. Intrinsic value is defined as the greater of zero or the in-the-money amount.

If an option is out-of-the-money, its intrinsic value is zero, not a negative number. The premium paid for an out-of-the-money option is entirely composed of time value.

Does a Deep Out-The-Money (OTM) Option Have a Delta Closer to 0 or 1?

Define “In-The-Money,” “At-The-Money,” and “Out-Of-The-Money” Options

Why Is Volatility More Important for an Out-of-the-Money Option than an In-the-Money Option?

What Is the Relationship between ‘Moneyness’ and Extrinsic Value?

What Is a ‘Binary Option’ and How Does It Differ from a Vanilla Option?

Why Do OTM Options Still Have a Small Amount of Time Value?

How Is the Intrinsic Value of an Out-of-the-Money Option Calculated?

Does the Intrinsic Value of an American Option Change over Time?

Glossar

Intrinsic Value

Valuation ⎊ This represents the in-the-money amount of an option, calculated as the difference between the spot price and the strike price, if positive, otherwise zero.

Maximum Intrinsic Value

Value ⎊ Within cryptocurrency derivatives and options trading, Maximum Intrinsic Value represents the highest possible profit obtainable from an option contract at expiration, assuming immediate exercise.