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Why Is the Intrinsic Value the Floor Price of an Option?

Intrinsic value is the floor price because a lower price would create an arbitrage opportunity.
Greeks.Live22.11.25

Why Is the Intrinsic Value the Floor Price of an Option?

The intrinsic value is the floor price because it represents the minimum value the option is worth if exercised immediately. If the option traded below its intrinsic value, an arbitrageur could buy the option and immediately exercise it for a risk-free profit, driving the price back up.

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