When Does an OTM Put Option Gain Intrinsic Value?
An Out-of-the-Money (OTM) Put option gains intrinsic value when the underlying crypto asset's spot price falls below the option's strike price. Once the spot price is lower than the strike price, the Put option becomes In-the-Money (ITM), and its intrinsic value is the difference between the strike price and the new, lower spot price.
Glossar
Otm Put Option
Protection ⎊ This instrument functions as a cost-effective mechanism for securing a minimum selling price for an underlying asset, even when the strike price is currently below the spot rate.
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.
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.
Spot Price
Valuation ⎊ The spot price in cryptocurrency, options, and derivatives represents the current market-clearing price for immediate delivery of the underlying asset, functioning as a fundamental benchmark for pricing more complex instruments.