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Finance allah shmoop what is the intrinsic value of an

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option All right this is brandi She owns a twelve

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dollars strike price call option toe buy a share of

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my fifteen minutes are up dot com a retirement home

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chain for reality tv stars who recently gained self awareness

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Well the stock is trading for fifteen bucks a share

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of this moment Her strike price is twelve so the

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intrinsic value of that option is fifteen minutes twelve or

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three bucks that is it is three dollars in the

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money and if brandy converted it into a share this

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moment and then immediately sold the stock for fifteen dollars

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in cash well she'd make three bucks But there's a

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catch per call option doesn't expire for five weeks so

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that three dollars in the money is actually worth more

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than three dollars because she has data or time yet

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to exercise and convert or just sell the option itself

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So it's worth mohr because well a stock might go

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up from fifteen dollars in overtime Stocks go up so

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in the next five weeks well couldn't go up a

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dime twenty cents twenty five cents and make that three

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Dollars worth three ten three twenty three Twenty five Sure

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sure it could happen So yeah that's The difference between

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actual value and intrinsic value You get seita kickers in

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there making the option's worth more than just converting them

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into stock and selling them right there And yeah it

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looks like our one and a half minutes are up

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