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        Meet the Options Greeks

        Views 60022022.12.21

        What is an Options' Intrinsic Value?

        We are hoping this to be an easy and simple lesson to introduce options to you. By following Options Basics' articles, you should be able to understand options and how to utilize options to either profit or protect your stock. 

        Coming into trading options, there are a few new terms that you might want to know. Intrinsic value would be one of them.

        In short, intrinsic value is the amount an option is in-the-money. Obviously, only in-the-money options have intrinsic value.

        Let's look at an example:

        https://courseimg.futunn.com/2022063000000332d036c726fb8.png

        If you look at the screenshot above, the current price of Tesla is $822.99. This means options with strikes lower than $822.99 are in-the-money options. 

        If we look at call options with a strike of $800, the intrinsic value of this option is $822.99(current price)-$800(in-the-money strike)=$22.99.

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        Opening new options positions close to or on their expiration date comes with substantial risk of losses for reasons that include potential volatility of the underlying security and limited time to expiration. Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request.

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