In Options Trading, What Is the Concept of Intrinsic Value for a Call Option? ▴ Learn

In Options Trading, What Is the Concept of Intrinsic Value for a Call Option?

The intrinsic value of a call option is the immediate profit an investor would realize if they exercised the option right now. It is calculated as the maximum of zero or the difference between the current underlying asset price and the option's strike price.

For example, if a stock is at $110 and the call strike is $100, the intrinsic value is $10. If the stock price is below the strike price, the intrinsic value is zero.

Intrinsic value is a component of the option's total premium.

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