What Is ‘Intrinsic Value’ in an Options Contract?

Intrinsic value is the immediate profit a trader would realize if the option were exercised right now. It is the difference between the underlying asset's current price and the option's strike price, but only if that difference is favorable to the holder.

For a call option, it is the greater of (Current Price – Strike Price) or zero. For a put option, it is the greater of (Strike Price – Current Price) or zero.

An option has intrinsic value only when it is 'in-the-money'.