Option intrinsic value
The part of the premium the option would be worth if it were exercised immediately.
Formula
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
Also known as: exercise value