Posted inEconomics
Intrinsic Value of an Option: Definition, Formulation & Examples
The intrinsic value of an option is the difference between the price of the underlying asset in the market and the exercise price.
Intrinsic value is always positive. When the difference between the price of the underlying asset and the strike price is negative, the intrinsic value equals 0. At expiration, the intrinsic value is the value of the option.


