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

An option's moneyness (in-the-money, at-the-money, or out-of-the-money) directly determines its intrinsic value. Only in-the-money options have positive intrinsic value.

At-the-money and out-of-the-money options have an intrinsic value of zero. Moneyness is the primary factor in calculating the intrinsic value component of the option's premium.