Intrinsic Value
The "real" in-the-money worth baked into an option's price — the part that isn't just time and hope.
Definition
Intrinsic value is the portion of an option's premium that you would capture if you exercised it right now — the amount by which it is in the money. An out-of-the-money option has zero intrinsic value.
Formula
- Call: intrinsic value = max(spot − strike, 0).
- Put: intrinsic value = max(strike − spot, 0).
Example
NIFTY spot 22,600, a 22,500 call → intrinsic value = 22,600 − 22,500 = 100. If the call trades at 150, the remaining 50 is time value.
Why it matters
Splitting premium into intrinsic + time value tells you how much of what you're paying is "solid" versus how much will decay away as expiry nears. Deep ITM options are mostly intrinsic; OTM options are pure time value.
See premium broken down live
TradePulse's option chain and Greeks calculator show how premium splits into intrinsic and time value.