Options trading
Intrinsic value (options)
Definition
For a call, the stock price minus the strike; for a put, the strike minus the stock price. It is never below zero.
Example
Say a stock trades at $72. A $65 call has $7 of intrinsic value, or $700 per contract, and an $80 put has $8, or $800. A $75 call has zero intrinsic value, not minus $3, because nobody would exercise a right to pay more than the market price.
Hypothetical numbers, for illustration only.
Also defined in
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