**Intrinsic Value of Options**

- Intrinsic value is the higher of zero and the value of the option if the option were exercised immediately.

Â **At the money:**Price of the underlying is the same as the strike price of the option and carries nil payoff.

Â**In the money:**Price of the underlying is greater / smaller than the strike price of a call / put option and exercising it results in a positive pay off.

Â**Out of the money:**Price of the underlying is smaller / greater than the strike price of a call / put option and exercising it results in a nil pay off.

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