The intrinsic value of an option
A)is equal to the option premium.
B)is the amount the option actually is worth if it is immediately exercised.
C)is the amount the option is expected to be worth on its expiration date.
D)is impossible to determine in the absence of information on the future prices of the underlying asset.

Question

Quizplus · Accepted Answer

The intrinsic value of an option is the actual value that an investor would gain if they exercised the option immediately. It is calculated based on the difference between the current price of the underlying asset and the strike price of the option, for options that are in the money.

The Intrinsic Value of an Option