What is the intrinsic value calculation for options?

The intrinsic value of an option is determined by the relationship between the current market price of the underlying asset and the strike price of the option. For a call option, intrinsic value is calculated as the current market price of the underlying asset minus the strike price. This reflects the profit that can be realized if the option were exercised at that moment. If the current market price is above the strike price, the call option has intrinsic value. Conversely, for a put option, the intrinsic value is calculated as the strike price minus the current market price, which indicates how much profit could be realized if the put option were exercised.

In this case, the correct answer accurately identifies the method used to calculate the intrinsic value for call options, which is based on the current market price exceeding the strike price. This understanding is crucial for options traders and investors to assess the potential profitability of their options positions.