The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. On today’s call, we’re going to help you explain what option intrinsic value is, so that you have a better understanding of it moving forward and we’re going to use a very simple example to help prove this point because option intrinsic value is actually very simple to understand. There's basically two broad categories of option pricing or broad components of an options price. There's the intrinsic value and the extrinsic value. As the names suggest, one is potentially internal value and the other is external value, so things that are not necessarily present on a basis right now. When it comes to intrinsic value, all intrinsic value is for an option price is the value that could be derived if the option contract were to be exercised or assigned immediately by the long option buyer. And so, when it comes to a call option, this would generally mean that if you exercised your long call option that you would derive some am