What Is ‘Intrinsic Value’ in the Context of an Options Contract?
Intrinsic value is the immediate profit an option holder would realize if they exercised the option right now. 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. It represents the "in-the-money" portion of the option's total value.
