The value of an option if it were to immediately expire, that is, its lower pricing bound, is called an option's _________________.
A) Strike value.
B) Market value.
C) Volatility value.
D) Time value.
E) Intrinsic value.

Question

Quizplus · Accepted Answer

The intrinsic value of an option is the value it would have if it were to expire immediately. It represents the actual value of the option based on the current price of the underlying asset relative to the option's strike price, excluding any time value or extrinsic value.

The Value of an Option If It Were to Immediately