Intrinsic Value
Definition
The immediate exercise value of an option. For a call: max(underlying price – strike, 0). For a put: max(strike – underlying price, 0).
Formula / Rules
Call: $ \max(S - K, 0) $; Put: $ \max(K - S, 0) $
Example
SPX 6300 with 6200 call strike has $100 intrinsic value. Time Value (Extrinsic Value) Category: Options Definition: The portion of an option’s premium above its intrinsic value, reflecting time until expiration and implied volatility. R
Frequently Asked Question
What is Intrinsic Value in trading?
The immediate exercise value of an option. For a call: max(underlying price – strike, 0). For a put: max(strike – underlying price, 0).
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.