intrinsic value


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Related to intrinsic value: Extrinsic value

Intrinsic value

The value of an option if it were to expire immediately with the underlying stock at its current price; the amount by which an option is in-the-money. For call options, this is the difference between the stock price and the strike price, if that difference is a positive number, or zero otherwise. For put options it is the difference between the strike price and the stock price, if that difference is positive, and zero otherwise. See also: In-the-Money, Time Value Premium, Parity.

Intrinsic Value

1. The actual value of an asset. That is, the intrinsic value is what an asset is actually worth, rather than its current market value, which is overly influenced by market conditions such as a recession or a speculative bubble. One may think of the intrinsic value of an asset as its value "in a perfect world," because one may not always be able to receive the intrinsic value. For example, the intrinsic value of a baseball card may be $10,000, but if prevailing market conditions render investors uninterested in buying baseball cards, one may only be able to sell the card for $5,000. That said, the line between intrinsic and extrinsic value is sometimes blurry.

2. The gain 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, these options may be sold for a much higher price than the investor paid for the option.

intrinsic value

The value of a security, justified by factors such as assets, dividends, earnings, and management quality. Intrinsic value is at the core of fundamental analysis since it is used in an attempt to calculate the value for an individual stock and then compare it with the market price. Because analysts view facts differently, there is often a wide disparity in estimates of a particular stock's intrinsic value.

Intrinsic value.

A company's intrinsic value, or underlying value, is used to calculate its projected worth.

You determine intrinsic value by subtracting long-term debt from anticipated future assets, including profits, the potential for increased efficiency, and the sale of new stock.

Another approach is to calculate intrinsic value by dividing the company's estimated future earnings by the number of its existing shares. This method weighs the current price of a stock against its future worth.

Critics of using intrinsic worth as a way to evaluate potential investments point out that all the numbers except debt are hypothetical.

The term is also used in options trading to indicate the amount by which an option is in-the-money. For example, an equity call option with a strike price of 35 has an intrinsic value of $4 if the market price of the underlying stock is $39. But if the market price drops to $34, the option has no intrinsic value.

intrinsic value

An appraisal term meaning an intangible value based on a property's proximity to certain features and amenities, such as good schools, health care, and shopping.

References in periodicals archive ?
He continues, "With alkaline batteries, there really isn't any added value or intrinsic value to that material, generally speaking.
The cumulative accounting charge associated with variable stock option plans is the intrinsic value at the end of each accounting period until the measurement date.
The EITF reached a consensus that, for repurchased compensatory stock options that have no intrinsic value at the buyout date, total compensation cost recognized should be the sum of the compensation cost amortized to the buyout date and the cash paid to repurchase the outstanding options.
Ultimate Objective: Maximizing Intrinsic Value per Share
Even if an option has no intrinsic value today, it may in the future if the stock price increases.
The Board of Intrinsic Value plc ("Intrinsic Value" or the "Company") is
In times of uncertainty, homebuyers are interested in investing in areas that have intrinsic value and where apartments will likely continue to appreciate over time," said Sunshine.
We saw an intrinsic value in this building that apparently others did not," Rosen said.
Advanced Photonix, Inc (AMEX: API) today announced that it is amending its FY2005 & FY 2006 10-Ks and its 1st quarter FY 2007 10-Q, to reflect a restatement of its Consolidated Financial Statements for FY2005 and FY2006 to conform to relevant accounting guidance regarding convertible securities specifically the calculation of the intrinsic value and non-cash interest expense associated with the beneficial conversion features of the Company's convertible notes in accordance with Financial Standards Board (FASB) Emerging Issues Task Force (EITF) Application Issue 98-5 & 98-0027 guidance of October 2005.
its Investment Manager, Intrinsic Value Partnership Limited ("IVPL") and
Our goal is five business combinations per year and 12-15 over a three (3) year period, giving Global 1 an intrinsic value of $0.
According to Rothman, he made his investment offer because, 'I believe Nendels has significant intrinsic value, but is in dire financial condition and needs additional working capital if it is to survive long enough to complete a transaction with Park Inns or consider any other opportunities which might allow shareholders to realize on that intrinsic value.

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