Intrinsic value

1. The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value. Value investors use a variety of analytical techniques in order to estimate the intrinsic value of securities in hopes of finding investments where the true value of the investment exceeds its current market value.

2. For call options, this is the difference between the underlying stock's price and the strike price. For put options, it is the difference between the strike price and the underlying stock's price. In the case of both puts and calls, if the respective difference value is negative, the instrinsic value is given as zero.

Investopedia Says:
1. For example, value investors that follow fundamental analysis look at both qualitative (business model, governance, target market factors etc.) and quantitative (ratios, financial statement analysis, etc.) aspects of a business to see if the business is currently out of favor with the market and is really worth much more than its current valuation.

2. Intrinsic value in options is the in-the-money portion of the option's premium. For example, If a call options strike price is $15 and the underlying stock's market price is at $25, then the intrinsic value of the call option is $10. An option is usually never worth less than what an option holder can receive if the option is exercised.

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Financial analysis: valuation determined by applying data inputs to a valuation theory or model. The resulting value is comparable to the prevailing market price.

Options trading: difference between the Exercise Price or strike price of an option and the market value of the underlying security. For example, if the strike price is $53 on a call option to purchase a stock with a market price of $55, the option has an intrinsic value of $2. Or, in the case of a put option, if the strike price was $55 and the market price of the underlying stock was $53, the intrinsic value of the option would also be $2. Options At the Money or Out of the Money have no intrinsic value.

The inherent value of tangible property; contrast Intangible Value.
Example: Silver, gold, works of art, and land are said to have intrinsic value just because they are desirable to possess.

Intrinsic value can refer to:

• Intrinsic value (finance), of an option or stock.
• Intrinsic value (numismatics), of a coin.
• Intrinsic value (ethics), in philosophy.
• Intrinsic value (animal ethics), in philosophy.
• Intrinsic theory of value, an economic theory of worth.

See also

• Extrinsic value
• Value

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