The immediate exercise value of an option, calculated as the favorable difference between the current asset price and the strike price. For call options, it's the stock price minus strike price (if positive); for puts, it's strike price minus stock price (if positive).
From Latin 'intrinsecus' meaning 'inwardly/internally' and 'valere' meaning 'to be worth.' The term emphasizes value that exists within the option itself, independent of time or market conditions, distinguishing it from speculative or time-based value components.
Intrinsic value is like the cash you could pull out of an ATM right now if you exercised your option - it's real, immediate money, not hopes and dreams! An option can never trade below its intrinsic value because arbitrageurs would instantly buy the option, exercise it, and pocket the guaranteed profit.
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