What is the Intrinsic Value of an option?
The intrinsic value of an option is defined as the amount, by which an option is in-the-money, or the immediate exercise value of the option when the underlying position is marked-to-market. For a call option: Intrinsic Value = Spot Price – Strike Price For a put option: Intrinsic Value = Strike Price – Spot Price The intrinsic value of an option must be a positive number or 0. It can’t be negative. For a call option, the strike price must be less than the price of the underlying asset for the call to have an intrinsic value greater than 0. For a put option, the strike price must be greater than the underlying asset price for it to have intrinsic value.
The intrinsic value of an option is defined as the amount by which an option is in the money or the immediate exercise value of the option when the underlying position is marked-to-market. For a call option: Intrinsic Value = Spot Price – Strike Price For a put option: Intrinsic Value = Strike Price – Spot Price The intrinsic value of an option must be a positive number or 0. It cannot be negative. For a call option, the strike price must be less than the price of the underlying asset for the call to have an intrinsic value greater than 0. For a put option, the strike price must be greater than the underlying asset price for it to have intrinsic value.
The intrinsic value of an option is the difference between the exercise price of the option and the market price of the underlying commodity. It cannot be less than zero since the option expires worthless. Say you have a stock call option — the right to buy the stock at a given price during the contract period. If the exercise price of the call is $60 and the stock is selling for $65, the intrinsic value is $5 since you can buy the stock for $60 and sell it for $65. If the stock is selling for $55, the intrinsic value of the call is zero. (Why buy the stock for $60 when you can buy it in the market for $55?) The same is true for stock put option — the right to sell the stock at a given price within or at the end of the contract period. If the exercise price of your put is $60 and the stock is selling for $65, the intrinsic value is zero since you would let the put expire worthless. However, if the stock is selling for $55, the put has an intrinsic value of $5 ($60 minus $55).
The intrinsic value of an option is defined as the amount by which an option is in-the-money, or the immediate exercise value of the option when the underlying position is marked-to-market. For a call option: Intrinsic Value = Spot Price – Strike Price For a put option: Intrinsic Value = Strike Price – Spot Price The intrinsic value of an option must be a positive number or 0. It cannot be negative. For a call option, the strike price must be less than the price of the underlying asset for the call to have an intrinsic value greater than 0. For a put option, the strike price must be greater than the underlying asset price for it to have intrinsic value. Who are the players in the Options Market? Developmental institutions, Mutual Funds, FIs, FIIs, Brokers, Retail Participants are the likely players in the Options Market. Top NIFTY OPTIONS An option gives a person the right but not the obligation to buy or sell something.
