Does an OTM Option Have Intrinsic Value? ⎊ Path

Does an OTM Option Have Intrinsic Value?

No, an out-of-the-money (OTM) option has zero intrinsic value. Intrinsic value is the immediate profit upon exercise.

Since an OTM option would not be profitable to exercise immediately, its intrinsic value is zero. The entire premium paid for an OTM option is purely time value.

Differentiate between ‘In-the-Money’ and ‘Out-of-the-Money’

Why Is the Delta of a Deep OTM Option Close to Zero?

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

Why Does an OTM Option Only Have Extrinsic Value?

What Does “Out-of-the-Money” (OTM) Imply about an Option’s Intrinsic Value?

What Is the Relationship between an Option Expiring Worthless and Its Intrinsic and Extrinsic Value?

How Does an ITM Call Option Differ from an “Out-of-the-Money” (OTM) Call Option?

What Happens to the Premium of an OTM Option at Expiration?

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.