Intrinsic Value
What is Intrinsic Value?
Intrinsic value is the portion of the option premium that is in the money. If the stock price is above the strike price of the call option, the intrinsic value of the option can be calculated by taking the difference between the current stock price and the strike price of the option. Conversely, if the stock price is less than the strike price of the put option, the intrinsic value of the option can be calculated by taking the difference between the strike price and the current price of the stock.
Up until options expiration, a call option will have value even when the stock price is below the strike price. This value will represent the time premium component of the option. At expiration, time value will have fully decayed and the option will only be worth its' intrinsic value.
Watch Related Videos
Options Course
1. Stock Options Introduction
Options Basics
2. Call Option
3. Put Option
4. Strike Price
5. Expiration Date
6. Underlying Security
7. Options Moneyness
8. Options Risks
Options Volatility
9. Implied Volatility
10. VIX
11. Options Greeks
Bullish Options Strategies
12. Bull Call Spread
13. Bull Put Spread
14. Bull Calendar Spread
15. Bear Put Spread
16. Call Ratio Spread
17. Call Ratio Backspread
18. Butterfly Spread
19. Collar
20. Covered Calls
21. Long Guts
22. Long Straddle
23. Long Strangle
24. Married Puts
25. Naked Puts
26. Short Straddle
27. Short Strangle
28. Synthetic Calls
29. Vertical Spread
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