Intrinsic Value and Time
Intrinsic Value for call option is underlying stock price minus strike price.
Intrinsic Value = Underlying Stock Price – strike price
Intrinsic Value for put Option is strike price minus underlying stock price.
Intrinsic Value = strike Price – Underlying stock price
Option Premium is Intrinsic Value plus ( addition) Time Value.
Option Premium = Intrinsic Value + Time Value
Time Value = Premium minus Intrinsic Value
