# Define 'Intrinsic Value' and 'Time Value' in the Context of an Option Price ▴ Learn

**Published:** 2025-11-07
**Categories:** Learn

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## Define ‘Intrinsic Value’ and ‘Time Value’ in the Context of an Option Price.

Intrinsic Value is the immediate profit if the option were exercised now. For a Call, it is the Stock Price minus the Strike Price (if positive).

Time Value (or Extrinsic Value) is the amount by which the option's premium exceeds its intrinsic value. It reflects the probability that the option will move further into the money before expiration.

What Is the Primary Difference between Intrinsic Value and Time Value in an Option’s Premium?

Define ‘Intrinsic Value’ and ‘Extrinsic Value’ of an Option

How Can a Smart Contract Handle the Exercise of an American-Style Option, Which Can Be Exercised Any Time before Expiration?

Define the Terms ‘Intrinsic Value’ and ‘Time Value’ for an Option Contract

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A set of risk parameters (Delta, Gamma, Theta, Vega) measuring an option's price sensitivity to market factors.

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### [Does the Exercise Style (American Vs. European) Affect Intrinsic Value?](https://crypto.greeks.live/learn/does-the-exercise-style-american-vs-european-affect-intrinsic-value/)
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No, intrinsic value is based only on price vs. strike, not exercise style.

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A restriction preventing insiders from selling shares for a set time after an IPO to stabilize price.

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OTM call's intrinsic value is zero because Strike Price > Underlying Price, leaving only time value.

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Intrinsic value is the immediate profit from exercising the option, calculated as the amount the option is in-the-money.

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TWAP averages prices over a specific time interval leading up to expiration to prevent price manipulation at a single point.

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### [What Is the Intrinsic Value of a Put with a 50k Strike When Ethereum Is 52k?](https://crypto.greeks.live/learn/what-is-the-intrinsic-value-of-a-put-with-a-50k-strike-when-ethereum-is-52k/)
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Intrinsic Value = max(0, $50,000 - $52,000) = $0.

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On-chain governance embeds protocol change rules into the blockchain code, allowing token holders to vote on proposals that are automatically enforced.

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### [What Is the Relationship between ‘Moneyness’ and Intrinsic Value?](https://crypto.greeks.live/learn/what-is-the-relationship-between-moneyness-and-intrinsic-value/)
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Intrinsic value is present only when an option is In-the-Money (ITM); ATM and OTM options have zero intrinsic value.

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