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Intrinsic Value
The actual, fundamental value of an asset based on an understanding of its true characteristics, including all aspects of the business, in terms of both tangible and intangible factors.
Option
A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price on or before a certain date.
Underlying Asset
Refers to an asset (e.g., stocks, bonds, commodities) on which a derivative's value is based.
European Option
An option that can only be exercised at the end of its life, at its expiration date, unlike American options which can be exercised at any time up to the expiration date.
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