Intrinsic Value

Definition - What does Intrinsic Value mean?

Intrinsic Value is the amount by which an option is in the money.

Testopedia explains Intrinsic Value

An option's premium is made of intrinsic value and time value. The option's time value is the amount by which the option's premium exceeds its intrinsic value. Calls have intrinsic value when the underlying stock price is greater than the option's exercise price. Puts have intrinsic value when the underlying stock price is lower than the put's exercise price.

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