Option Intrinsic Value

Options
Updated Apr 2026 • Has calculator

The immediate exercise value of an option — how much it is in the money.

What is Intrinsic Value?

The intrinsic value of an option is the profit you would realise if you exercised it right now. For a call, it is the stock price minus the strike price (if positive); for a put, it is the strike price minus the stock price (if positive). Out-of-the-money options have zero intrinsic value. The total option price equals intrinsic value plus time value. Intrinsic value can never be negative — it floors at zero.

Formula

Call: max(S − K, 0) | Put: max(K − S, 0)

Worked Example

Worked example — Apple Inc. (AAPL) — in-the-money call

Representative Q1 2024 market conditions

Step 1  Scenario A — In-the-money call:
Step 2   Stock price (S): $195.00, Strike (K): $185.00
Step 3   Call intrinsic = max($195 − $185, 0) = $10.00
Step 4  Scenario B — Out-of-the-money call:
Step 5   Stock price (S): $175.00, Strike (K): $185.00
Step 6   Call intrinsic = max($175 − $185, 0) = $0.00
Step 7  → If the market price of the call is $12.00, time value = $12.00 − $10.00 = $2.00

Source: Hull, J.C. — Options, Futures, and Other Derivatives, 11th ed., Ch. 10 (2024-01-15)

Calculate Intrinsic Value

Current market price of the underlying stock

Option strike price

Enter 'call' or 'put'

Intrinsic Value

—

Not investment advice.

How to Interpret Intrinsic Value

< 0
Out-of-the-money — zero intrinsic value
0 – 5
Slightly ITM — small intrinsic value
5 – 20
In-the-money — meaningful intrinsic value
> 20
Deep ITM — option dominated by intrinsic value
Sources
  1. Hull, J.C. — Options, Futures, and Other Derivatives, 11th ed.
  2. Investopedia — Intrinsic Value