- intrinsic value
- The amount by which an option is in-the-money. An option having intrinsic value. A call option is in-the-money if its strike price is below the current price of the underlying futures contract. A put option is in-the-money if its strike price is above the current price of the underlying futures contract. Chicago Board of Trade glossary————The amount an option is in the-money, calculated by taking the difference between the strike price and the market price of the underlying futures contract when the option is "in-the-money." A COMEX 350 gold futures call has an intrinsic value of $10 if the underlying gold futures contract is at $360/ounce. The CENTER ONLINE Futures Glossary————That portion of an option's value that derives from the fact that the option is in the money. The difference between exercise price of the option and the price of the underlying. The other primary component of an option's price is its time value. American Banker Glossary————The relationship of an option's in-the-money strike price to the current futures price. For a put: strike price minus futures price. For a call: futures price minus strike price. Chicago Mercantile Exchange Glossary————Used in connection with options and warrants. For a call option or a warrant on shares, it is the amount by which the share price exceeds the exercise price of the option or warrant. For a put option, it is the amount by which the exercise price exceeds the share price, i.e. it is the net amount received if an investor exercises the warrant or option and then closes out ( close out) the position by buying a share (for a put option) or selling a share (for a call option or a warrant). For example, a call option with an exercise price of 100p when the share price is 150p has intrinsic value of 50p. The holder of the option could exercise the option, buying a share for 100p and then immediately sell the share for 150p, giving a net pay off of 50p. Intrinsic value has a minimum value of zero, since an investor would never exercise an option to give a loss. Dresdner Kleinwort Wasserstein financial glossary————The amount by which an option is in-the-money. The intrinsic value is the difference between the exercise/strike price and the price of the underlying security. Exchange Handbook Glossary————A term used in options and covered warrants. For a call option / warrant, a 'positive intrinsic value' denotes the difference between the current underlying asset price and the exercise price. For a put option / warrant, a 'positive intrinsic value' denotes the difference between the exercise price and the underlying asset price London Stock Exchange Glossary————The in-the-money portion of a warrant's premium. (See in the money.) NYSE Euronext Glossary
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When an option is 'in the money' it is said to have intrinsic value. It is calculated by taking the difference between the forward market value of the underlying instrument and the strike price of the option.► See also In the Money, Option.* * *
intrinsic value UK US noun [C] FINANCE► the real value of a company, asset, etc., which may not be the price it could be sold for now: »If a share's price is less than its intrinsic value, it should be bought.
Financial and business terms. 2012.
