The difference between the value of an option and the intrinsic value of an option

1. The concept is different: the option value is that the value of the convertible bond will usually exceed the pure bond value and the conversion value. The intrinsic value of an option is the present value of the return that can be made when the option is exercised by multiple parties.

2. The formula is different: the intrinsic value of the option is the option ** = the intrinsic value of the option + the time value of the option. Option Value = Embedded Value + Time Value.

3. The intrinsic value is different: the intrinsic value of the option is the part of the value that reflects the relationship between the option finalization and the current value. The intrinsic value of an option is the value at which the option is exercised immediately (i.e., assuming it is an American-style option).

For example, if the market price of a call option is $50 per share, and the finalization of a call option with this ** as the underlying asset is 45$ per share, if the trading unit of this call option is 100 shares, then the option is exercised immediately, i.e., at the price of 45$ per share, 100 shares, and then sold at 50$ per share in the market] The intrinsic value of this call option is equal to.

The time value of an option is the value of the premium actually paid by the option purchaser to purchase the option in excess of the intrinsic value of the option. It has to do with the remaining term and intrinsic value. Generally speaking, the longer the remaining period, the greater the value of time; However, as the option approaches its expiration date, all other things being equal, the time value declines faster and gradually tends to zero.

The time value of an option, also known as extrinsic value, refers to the value of the premium paid by the purchaser of an option contract for the purchase of an option that exceeds the intrinsic value of the option. The time value of the option is related to the remaining term of the transfer, the historical volatility of ****, and the current level of ****: the longer the remaining time of the transfer, the greater the change, and the higher the time value of the option; **The higher the volatility, the higher the time value of the option; If the stock price is too high or too low, the lower the time value of the option.

The intrinsic value of an option is the present value of the return that can be obtained when the option is exercised by multiple parties. Option** = Intrinsic Value of Option + Time Value of Option.

The ** of an option can be divided into two parts: intrinsic value and time value.

The intrinsic value of an option is the value of the option when it is exercised immediately (i.e., assuming it is an American-style option).

Intrinsic value of option iv = max(0, s-x) Intrinsic value of sell option iv = max(0, x-s) where s is the current market price and x is the strike price.

The reason why options are valuable is that they have the right to sell the underlying asset at the agreed time or at the agreed price. With this right, it is possible to buy and sell the underlying asset at a better than market price in the future. In order to obtain this right, the buyer needs to pay a certain premium, which is the ** of the option.

So, what is the difference between an option** and an option value?

When investors buy options, they are actually buying the probability that it will work for a certain period of time. The call right reflects the probability of the upward movement, and the put right reflects the probability of the downward movement.

The calculation method is different:

Option value refers to the intrinsic value of the option itself that changes over time or decreases over time, and the option** fluctuates up or down around the value of the option.

Options** (premiums) are made up of two parts: "intrinsic value" and "time value". The intrinsic value of an option is the present value of the benefits that can be made when the option is exercised by multiple parties. The time value of an option is also affected by the intrinsic value of the option.

In-the-money option premium = intrinsic value + time value; at-the-money premium = time value; Out-of-the-money option premium = time value.

In general, the difference between the option and the value is determined by the market supply and demand, and the value can be calculated, which is always close to the value of the option.

We know from various theoretical models that the value of an option is related to the following factors: execution, underlying, underlying volatility, risk-free interest and time to expiration. When these five factors can be determined, we can get the fair value of the option.

Generally speaking, ** refers to the ** reached through market transactions, which can be regarded as the market's pricing of trading products.

In reality, there are only four factors that can be obtained directly from the market, and ** can be obtained directly from the market, and in turn the volatility is derived, and it can be considered that the ** of the option reflects the market's pricing of volatility.

Option Value = Intrinsic Value + Time Value. Intrinsic value means that the value of an option can only be positive or zero if it is exercised immediately.

Time value refers to the possibility that the underlying of the contract will change in favor of the option right holder during the remaining validity period of the option.

The main factors that affect the change of option value are as follows:

1) Changes in the underlying assets**;

2) changes in the volatility of the underlying asset;

3) a reduction in the remaining duration of the option;

4) Changes in dividends of the underlying assets;

5) Exercise**.

Hello, option value consists of two parts: intrinsic value and time value.

In-the-money options have intrinsic value + time value.

The intrinsic value of an option refers to the current actual value of the option, that is, the difference between the exercise price of the option and the current market price of the underlying asset. When the intrinsic value of the option is greater than zero, the option is in a profitable state, when the intrinsic value is equal to zero, the option is in a balanced state, and when the intrinsic value is less than zero, the option is in a losing state.

For call options, when the strike price of the option is lower than the current market price of the underlying asset, the option has a positive intrinsic value, because holding the option can make a profit on the exercise date with the exercise price lower than the market price of the underlying asset. For put options, when the strike price of the option is higher than the current market price of the underlying asset, the option has a positive intrinsic value, because holding the option can sell the underlying asset at a ** higher than the market price of the underlying asset on the exercise date, thereby making a profit.

Therefore, when the market of the underlying asset** is higher than the strike price of the call option, the call option has a positive intrinsic value; When the market** of the underlying asset is below the put strike price, the put option has a positive intrinsic value.

The answer is: in-the-money options.

Premiums are made up of intrinsic value and time value. The intrinsic value of an option is determined by the exercise of the option contract in relation to the underlying market, which means that the option buyer can sell the proceeds of the underlying on better terms than the existing market. Intrinsic value can only be positive or zero.

Only in-the-money options have intrinsic value, at-the-money options, and out-of-the-money options.

None have intrinsic value.

Intrinsic value of an in-the-money call option = **** of the current underlying.

Option strike price.

Intrinsic value of an in-the-money put option = option strike price - underlying ****.

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The intrinsic value of an option is the actual value of the option in the current market**. When buying or holding an option, the option has intrinsic value if its exercise is favorable to the market for the underlying asset.

In the case of a call option, if the strike of the call option is lower than the market for the underlying asset, then the call option has intrinsic value. Because holding this call option allows investors to buy the underlying asset at a lower than market price, thereby making a profit.

In the case of a put option, if the call strike of the put option is higher than the market of the underlying asset, then the put option has intrinsic value. Because holding this put option allows investors to sell the underlying asset at a higher level than the market, so as to make a profit.

When the intrinsic value of an option is positive, investors can make a profit by exercising the option; When the intrinsic value of an option is zero or negative, the investor does not make a profit from exercising it. Since the intrinsic value is the basic value of the option, it has an important impact on the option, and investors need to pay attention to the intrinsic value of the option and the related risks and returns when trading options.

The value of an option contract is scattered, including intrinsic value and time value. The intrinsic value reflects the relationship between the underlying asset** and the option exercise**, and the income obtained after the immediate exercise. The gross profit margin obtained by the company is also called intrinsic value, and does not need to deduct the profit from the option premium.

The intrinsic value of an in-the-money option is above zero, and the intrinsic value of an out-of-the-money option is zero.

The intrinsic value of an option is determined by the exercise of the option contract in relation to the underlying market, which means that the option buyer can sell the proceeds of the underlying on better terms than the existing market. The intrinsic value of an option can only be positive or zero. Only in-the-money options have intrinsic value, and at-the-money and out-of-the-money options have no intrinsic value.