Intrinsic value - Financial definition
Financial acronyms
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Concise definition of the term intrinsic value
The intrinsic value of an option is the amount by which it is in the money. It is calculated by taking the difference between the strike price and the market price of the underlying asset.
Comprehensive definition of the term intrinsic value
Example:
A call option with a strike of $5.50 whose underlying has a market price of $8.50 has an intrinsic value of ($8.50 - $5.50) = $3.