Pricing
Intrinsic Value
Amount option is ITM
What is Intrinsic Value?
Intrinsic Value The amount an option is in-the-money. For calls: stock price - strike (if positive). For puts: strike - stock price (if positive). Can never be negative.
Complete Definition
The amount an option is in-the-money. For calls: stock price - strike (if positive). For puts: strike - stock price (if positive). Can never be negative.
Example
AAPL at $155. The $150 call has $5 intrinsic value. The $160 call has $0 intrinsic value.
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