You are here: HomeOptionsPricingHow can you Determine the Intrinsic Value of a Put Option?

How can you Determine the Intrinsic Value of a Put Option?

poe 03 030 030 01

The difference between the exercise price and the share price is the intrinsic value of a put.

Example: 100 – 90 = 10

If the share price is lower than the exercise price the put option is "in-the-money". There is a positive intrinsic value.

Share price = Exercise price → "at-the-money"

If share price and exercise price are identical, the intrinsic value is zero. The option is "at-the-money". A negative intrinsic value is derived mathematically if the share price is higher than the exercise price. As the holder will not exercise the option in this case, the intrinsic value is zero. The option is thus "out-of-the-money".

Share price = Exercise price → out-of-the-money“

Intrinsic value put

Share price > Exercise price
100 > 90
out-of-the-money
Intrinsic value: 0
Share price = Exercise price
100 = 100
at-the-money
Intrinsic value: 0
Share price < Exercise price
80 < 100
in-the-money
Intrinsic value: 20

error messagebox
00:00

Go to top