Can an Option's Intrinsic Value Be Negative? ⎊ Path

Can an Option’s Intrinsic Value Be Negative?

No, an option's intrinsic value cannot be negative. Intrinsic value is defined as the maximum of (Underlying Price – Strike Price) or (Strike Price – Underlying Price) and zero.

If the calculation yields a negative number, the intrinsic value is simply zero.

Can an Option’s Vega Ever Be Negative for a Long Position?

Is a ‘Flat Book’ Always the Ideal State for a Market Maker?

Why Is Intrinsic Value Always Non-Negative?

Why Is Extrinsic Value Always Positive for Options with Time Remaining until Expiration?

How Does Intrinsic Value Relate to the Concept of ‘Moneyness’?

Can an Option Have a Negative Intrinsic Value?

Can an Option Have Negative Intrinsic Value?

Can an ITM Option Have a Negative Extrinsic Value?

Glossar

Intrinsic Value Formula

Core Calculation ⎊ The Intrinsic Value Formula determines the immediate, in-the-money profit potential of an option, calculated simply as the difference between the underlying asset's spot price and the strike price, provided this difference is positive.

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.