Intrinsic value of an option

Intrinsic value of an option

The amount by which an option is in the money. An option that is not in the money has no intrinsic value.

Intrinsic Value of an Option

The profit that an option holder would receive by exercising an in-the-money option. That is, the intrinsic value of an option is how much the strike price is below the underlying asset (for a call) or above the underlying asset (for a put). These options have intrinsic value because they always result in a profit. As a result, they may be sold for a much higher price than the investor paid for the option.
References in periodicals archive ?
The stock price and option exercise price combine to create the intrinsic value of an option.
Can the system differentiate between components of the change in fair value, such as time value and intrinsic value of an option, for purposes of assessing hedge effectiveness?
First, the intrinsic value of an option refers to the excess (if any) of the stock's value over the exercise price.
In effect, the intrinsic value of an option disappears and a company must reprice to recapture value.
The intrinsic value of an option is the difference between the underlying stock's exercise price and its FMV (the bargain element of the option).