Intrinsic Intel

Quantitative Finance Level 3

INTC's current stock price is $29.64. The put option on the $29 strike expiring in 7 days is currently worth $1.42.

What is the intrinsic value of this option?

$1.42 $0.64 $0.36 $0.00

1 solution

Chew-Seong Cheong
Mar 29, 2015

Intrinsic value $V_{in}$ of a put option of strike $K$ and stock price $S$ is given by:

\[\begin{array} {} V_{in} & =\max {(K-S,0)} \\ & = \max{(29-29.64,0)} \\ & = \max{(-0.64,0)} \\ & = \boxed{\$0.00} \end{array} \]

@Calvin Lin so on this 1 I got .64 cents. where is the zero coming from in the equation and are you multiplying -.64 and 0? also, I am doing these problems to learn more about this field of math, so if I am asking questions it isnt to challenge your "facts" but rather to understand the subject better.

michael bye - 5 years, 10 months ago

These terms are defined in Option value . I've written up the introductory wikis to provide basic explanations, and further understanding.

The intrinsic value is how much the option is worth if you were to exercise it immediately.

Calvin Lin Staff - 5 years, 10 months ago

Intrinsic Intel

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