← Options Glossary Together, intrinsic value and extrinsic value make up the two parts of an option’s total value. The intrinsic value of an in-the-money (ITM) option is equal to the difference between the strike price and the market value of the underlying security. For example, the $35 strike call with the underlying trading $40 has an intrinsic value of $5. Out-of-the-money (OTM) options do not have intrinsic value, only extrinsic value. Total Option Value = Extrinsic Value + Intrinsic Value
Intrinsic Value
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