Define "Intrinsic Value" of an Option ▴ Learn

Define “Intrinsic Value” of an Option.

Intrinsic Value is the immediate profit an option holder would realize if they exercised the option right now. It is the positive difference between the underlying asset's price and the option's strike price (for a Call), or the strike price and the asset's price (for a Put).

Options that are Out-of-the-Money have zero intrinsic value.

What Is the Difference between an “In-the-Money” (ITM) Call Option and a Put Option?

Explain the Concept of “Time Value” in Option Pricing

What Is the Relationship between an Option’s Intrinsic Value and Its ITM Status?

What Is Meant by an Option Being ‘In-the-Money’ (ITM), ‘At-the-Money’ (ATM), or ‘Out-of-the-Money’ (OTM)?