Valuation of Options is the difference between the underlying spot price and the strike price, to the extent that this is in favor of the option holder. For a call option, the option is in-the-money if the underlying spot price is higher than the strike price; then the intrinsic value is the underlying price minus the strike price. Valuation of Options can be split into two components: Intrinsic value and Time value.
Valuation of Options
