The two components of an option premium are the intrinsic value and time value of the option.

The intrinsic value is the difference between the underlying's price and the strike price – or the in-the-money portion of the option's premium.

Specifically, the intrinsic value of a call option is equal to the underlying price minus the strike price.

For a put option, the intrinsic value is the strike price minus the underlying price.

Option's Intrinsic Value Calculator helps caculating the Intrinsic Value of a Call Option or Put Option.