Intrinsic Value
The immediate exercise value of an option — how much in the money it is right now, ignoring time and volatility.
Call intrinsic = max(0, Spot − Strike) | Put intrinsic = max(0, Strike − Spot)
Intrinsic value is the real, tangible component of an option's premium. It is the profit a holder would lock in by exercising immediately.
For a call: max(0, Spot − Strike). For a put: max(0, Strike − Spot). An out-of-the-money option has zero intrinsic value — its entire premium is time value.
Deep-in-the-money options trade nearly entirely on intrinsic value, as the time value becomes negligible relative to the total premium.