# Intrinsic Value

Intrinsic Value
1. The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value. Value investors use a variety of analytical techniques in order to estimate the intrinsic value of securities in hopes of finding investments where the true value of the investment exceeds its current market value.

2. For call options, this is the difference between the underlying stock's price and the strike price. For put options, it is the difference between the strike price and the underlying stock's price. In the case of both puts and calls, if the respective difference value is negative, the instrinsic value is given as zero.

1. For example, value investors that follow fundamental analysis look at both qualitative (business model, governance, target market factors etc.) and quantitative (ratios, financial statement analysis, etc.) aspects of a business to see if the business is currently out of favor with the market and is really worth much more than its current valuation.

2. Intrinsic value in options is the in-the-money portion of the option's premium. For example, If a call options strike price is \$15 and the underlying stock's market price is at \$25, then the intrinsic value of the call option is \$10. An option is usually never worth less than what an option holder can receive if the option is exercised.

Investment dictionary. . 2012.

### Look at other dictionaries:

• Intrinsic value — Intrinsic In*trin sic ([i^]n*tr[i^]n s[i^]k), a. [L. intrinsecus inward, on the inside; intra within + secus otherwise, beside; akin to E. second: cf. F. intrins[ e]que. See {Inter }, {Second}, and cf. {Extrinsic}.] [1913 Webster] 1. Inward;… …   The Collaborative International Dictionary of English

• Intrinsic value — can refer to:*Intrinsic value (finance), of an option or stock. *Intrinsic value (numismatics), of a coin. *Intrinsic value (ethics), in philosophy. *Intrinsic theory of value, an economic theory of worth. ee also* Extrinsic value * Value …   Wikipedia

• intrinsic value — n. The inherent value of a thing, which remains constant regardless of place, time, or special features that affect its market value. The Essential Law Dictionary. Sphinx Publishing, An imprint of Sourcebooks, Inc. Amy Hackney Blackwell. 2008.… …   Law dictionary

• intrinsic value — The amount by which an option is in the money. An option having intrinsic value. A call option is in the money if its strike price is below the current price of the underlying futures contract. A put option is in the money if its strike price is… …   Financial and business terms

• intrinsic value — /ɪnˌtrɪnsɪk vælju:/ noun the material value of something ● These objects have sentimental value, but no intrinsic value at all. ● The intrinsic value of jewellery makes it a good investment …   Marketing dictionary in english

• intrinsic value — The difference between the market value of the underlying in a traded option and the exercise price when the option is in the money . Otherwise the intrinsic value is zero. See also time value …   Big dictionary of business and management

• Intrinsic value (ethics) — For intrinsic value of animals, see Intrinsic value (animal ethics). Intrinsic value is an ethical and philosophic property. It is the ethical or philosophic value that an object has in itself or for its own sake , as an intrinsic property. An… …   Wikipedia

• Intrinsic value (animal ethics) — This article is about human concern for animals. For rules of conduct between animals and other animal behaviour, see Ethology. The intrinsic value of an animal refers to the value it possesses in its own right, as an end in itself, as opposed to …   Wikipedia

• Intrinsic value (finance) — In finance, intrinsic value refers to the value of a security which is intrinsic to or contained in the security itself. It is also frequently called fundamental value. It is ordinarily calculated by summing the future income generated by the… …   Wikipedia

• Intrinsic value (numismatics) — In commodity money, intrinsic value can be partially or entirely due to the desirable features of the object as a medium of exchange and a store of value. Examples of such features include divisibility; easily and securely storable and… …   Wikipedia