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What makes up an option's price

Intrinsic value and time value.

5 min · Intermediate · Lesson 5 of 17

Step 1 of 5

Intrinsic value

Intrinsic value is what an option would be worth if used right now. For a call, it's the stock price minus the strike (if positive); for a put, the strike minus the stock price (if positive). Otherwise it's zero.

For entertainment and education, not investment advice.