Option Premium 2

Option Premium consists of Intrinsic Value and Extrinsic Value.

Only an ITM Option can be exercised at once to get a cash credit. This is because an ITM option has Intrinsic Value. 

ATM and OTM options have only Extrinsic Value. 

In Summary:
1. ITM Options  =  Intrinsic Value  +  Extrinsic Value
2. ATM Options =  0                   +  Extrinsic Value
3. OTM Options =  0                   +  Extrinsic Value
 

Example 1: AAPL Call Table

Next: Time Value ...