By Melody
We are hoping this to be an easy and simple lesson to introduce options to you. By following Options Basics' articles, you should be able to understand options and how to utilize options to either profit or protect your stock.
Coming into trading options, there are a few new terms that you might want to know. Intrinsic value would be one of them.
In short, intrinsic value is the amount an option is in-the-money. Obviously, only in-the-money options have intrinsic value.
Let's look at an example:
If you look at the screenshot above, the current price of Tesla is $822.99. This means options with strikes lower than $822.99 are in-the-money options.
If you look at the screenshot above, the current price of Tesla is $822.99. This means options with strikes lower than $822.99 are in-the-money options. If we look at call options with a strike of $800, the intrinsic value of this option is $822.99(current price)-$800(in-the-money strike)=$22.99.
Please stay with us for more on options basics!
Please stay with us for more on options basics!If there is anything that you didn't understand in today's Options Basics article, simply leave a comment below and we will try to explain more to you!
Comment(14)
Can you buy an Option pre-market and aftermarket hours trading?
No you can’t :(
what is a strike?
no
Please add more examples
option share expire on 21th May, if i dont sell the option , what will happen next, and what action l oblidge to do?
great explanation!
Options are a simple and efficient way to get you over leveraged, and they are essential tools used to manIpulate stock prices and steal our money…. crypto is next, unfortunately.
Futures are not there for your investing convenience… why do you think they have to make the potential returns so high in order to get you to participate?
This is for the highly experienced investors only, and even then I think it’s a bad route to take (for the rest of us). Study DCA and the other methods available to you first. Just my .02
good to know
Don’t be scared, let others make their money while you can’t with that explanation. To put it lightly, you can make still make money if you have money
good info
No, options only trade during market hours
oh you think I can get some help I don't know how does this work somebody's trying to hack my account to my name is Marcus Laney I live in Hawaii
Simple Analogy
👩🌾Farmer Bob has 🎟coupons that allow holders of the coupon to buy apples at $5 (strike price) 🍎 in 1 month (expiry date)
But current price of apples 🍎 is $6.
So in order to not get ripped off the farmer will sell that coupon 🎟 at 1 dollar.
💵current apple price ($6)- future selling price ($5) = coupon intrinsic value ($1)💵
Reason For Report