The price of an option/warrant consists of two components: "time value" and "intrinsic value". The intrinsic value of a call option is represented by the difference between the current market price of the underlying instrument and the exercise price, multiplied by the exercise ratio. An option/warrant only has intrinsic value if it is in the money. Otherwise, the intrinsic value is 0; it is never a negative figure. The intrinsic value of a put option/warrant is the difference between the exercise price and the current market price of the underlying instrument, multiplied by the exercise ratio. Intrinsic value is determined solely by the price of the underlying security. Changes in other factors, such as volatility, interest rates and dividends, only have an influence on the "time value" of an option/warrant.
