intrinsic value
Definition 1
The actual value of a security, as opposed to its market price or book value. The intrinsic value includes other variables such as brand name, trademarks, and copyrights that are often dificult to calculate and sometimes not accurately reflected in the market price. One way to look at it is that the market capitalization is the price (i.e. what investors are willing to pay for the company) and intrinsic value is the value (i.e. what the company is really worth). Different investors use different techniques to calculate intrinsic value.
Definition 2
The amount by which a call option is in the money, calculated by taking the difference between the strike price and the market price of the underlier. For example, if a call option for 100 shares has a strike price of $35 and the stock is trading at $50 a share than the call option has an intrinsic value> of $15 share, or $1500. If the stock price is less than the strike price the call option has no intrinsic value.
Definition 3
The amount by which a put option is in the money, calculated by taking the difference between the strike price and the market price of the underlier. For example, if a put option for 100 shares has a strike price of $35 and the stock is trading at $20 a share than the put option has an intrinsic value of $15 per share, or $1500. If the stock price is greater than the strike price the put option has no intrinsic value.
 Cite this definition
Related Terms
time value
'intrinsic value
' appears in the definitions of these terms on BusinessDictionary.comuse value, intangible property, in-the-money option, intrinsic worth, out-of-the-money option, and 
Related Articles from the InvestorGuide.com University
Stock Mutual Funds
Stock funds, also known as equity funds, can yield higher returns, but pose greater risks. Find out about growth funds, blend funds, sector funds, indexed funds, as well as funds defined by market capitalization and many others. Learn the differences between the different kinds, to find the best one for you before exposing yourself to risks.
Introduction to Mutual Funds
An explanation of mutual funds, with specific emphasis on advantages and disadvantages of this type of investment. If you were thinking of investing in a mutual fund, read this article!
Other Types of Mutual Funds
A variety of funds cannot be classified as stock funds or bond funds, as some invest in both, and some invest in neither. Learn about the properties of money market funds, income funds, balance funds, asset allocation funds, hedge funds, and many others to find out which one is right for you.
Related Resources from InvestorGuide.com
Mutual Fund Research Tool
Use our research tool to find in-depth data about mutual fund quotes, news, data, and profile information. Click here to view our mutual fund list or enter a mutual fund ticker here:
Featured Sponsor
|
|
