Define 'Intrinsic Value' of an Option ⎊ Path

Define ‘Intrinsic Value’ of an Option.

Intrinsic value is the immediate profit an option holder would realize if they exercised the option immediately. For a call option, it is the greater of (Underlying Price – Strike Price) or zero.

For a put option, it is the greater of (Strike Price – Underlying Price) or zero. An option must be in-the-money to have intrinsic value.

Define “Intrinsic Value” of an Option in the Context of Settlement

Define In-The-Money (ITM) for Both a Call and a Put Option

What Is the Maximum Intrinsic Value an Option Can Theoretically Reach?

What Is a “Synthetic Long Stock” Position Created Using Options?

Why Is Early Exercise Generally Not Optimal for an American Call Option on a Non-Dividend-Paying Asset?

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

Define the Intrinsic Value of a Call Option and a Put Option

How Is Intrinsic Value Related to the ‘Moneyness’ of an Option?

Glossar

Maximum Intrinsic Value

Value ⎊ Maximum Intrinsic Value for an option is achieved when it is exercised at the point where the difference between the underlying price and the strike price is maximized, which essentially occurs when the option is extremely deep in the money.

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.