intrinsic value

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manish kumar singh

manish kumar singh (Querist)
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14 February 2011 what is intrinsic value

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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15 February 2011 What Does Intrinsic Value Mean?
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.

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