What Is the Maximum Possible Intrinsic Value for a Put Option?
The maximum possible intrinsic value for a put option is the strike price. This occurs if the price of the underlying asset falls to zero.
In this scenario, the option holder can sell the asset (which is worth nothing) at the strike price, and the profit is the full strike price amount. This is the theoretical upper limit for a put option's value.
Glossar
Maximum Value
Threshold ⎊ This denotes the upper boundary of a variable, such as the highest price or notional amount, that a system or contract is designed to handle or process within defined operational parameters.
Strike Price
Reference ⎊ The Strike Price is the predetermined reference level set at the contract's inception against which the underlying crypto asset's spot price is compared at expiration or exercise.
Maximum Possible Intrinsic Value
Value ⎊ This metric represents the maximum intrinsic value an option can possess, which occurs only at the moment of exercise, equating to the full difference between the underlying asset price and the strike price.
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.
Theoretical Upper Limit
Valuation ⎊ The theoretical upper limit in cryptocurrency derivatives represents a price ceiling derived from no-arbitrage principles, constrained by underlying asset dynamics and model assumptions.