Option intrinsic value
The part of the premium the option would be worth if it were exercised immediately.
Formula
\text{Call intrinsic value} = \max(S - K, 0)S is the price of the underlying, K the strike. For a put the difference is taken the other way round. Intrinsic value is never negative: a right does not oblige.
How to read the number
The only part of the premium that does not melt with the passing of time: it is either there or it is not.
When the metric lies
For an option on futures the comparison must be with the futures price, not with spot. Measured against one or the other, the same option sits in different states.
Also known as: exercise value