Intrinsic Value on WebNotes

Moneyness: in-the-money, at-the-money, out-of-the-money

Sun, 21 Jun 2026 00:00:00 +0000

Moneyness is the classification of an option by where the price of the underlying sits relative to the strike, which determines whether the option carries intrinsic value. An option is in-the-money (ITM) when exercising it would yield a positive payoff, at-the-money (ATM) when the underlying is at or nearest the strike, and out-of-the-money (OTM) when exercising would yield nothing. Moneyness sets the split between intrinsic and time value in the premium, maps directly to delta , and, for single-stock options on Indian exchanges, decides whether a contract left to expiry triggers compulsory physical delivery.

Option premium

Sun, 21 Jun 2026 00:00:00 +0000

Option premium is the price of an options contract on a recognised exchange such as the National Stock Exchange , quoted per unit of the underlying, that the option buyer pays and the option seller receives in full at the trade. It has exactly two parts: intrinsic value, the amount by which the option is already in the money, and time value, everything the buyer pays beyond that for the chance the option gains before expiry.

STT on options exercise

Sun, 21 Jun 2026 00:00:00 +0000

Overview

Securities transaction tax on options exercise is the central-government levy charged when an in-the-money option is settled at expiry rather than sold in the market, computed at 0.15 per cent of the intrinsic, or settlement, value of the exercised quantity (Finance Act 2026, effective 1 April 2026; previously 0.125 per cent). It is collected at source by the exchange under the Finance (No. 2) Act 2004 and passed through on the contract note. The defining feature is the base: an exercised option is taxed on intrinsic value, while an option sold to close is taxed at 0.15 per cent of premium on the sell side. Those two bases can differ by an order of magnitude.

Intrinsic value estimation methodology at PPFAS

Sat, 16 May 2026 00:00:00 +0000

The intrinsic value estimation methodology at PPFAS is the systematic framework through which the investment team at PPFAS Mutual Fund estimates the fundamental value of equity securities considered for inclusion in the Parag Parikh Flexi Cap Fund and the broader scheme range. The methodology operationalises the value-investing principle that price and value are distinct concepts, with intrinsic value derived from the discounted stream of future cash flows that the underlying business is expected to generate. The methodology is documented at amc.ppfas.com/schemes/investment-process/ and is operationalised by Chief Investment Officer (Equity) Rajeev Thakkar , Head of Research Raunak Onkar , equity fund manager Rukun Tarachandani, and the broader PPFAS research team.

Margin of safety doctrine at PPFAS

Sat, 16 May 2026 00:00:00 +0000

The margin of safety doctrine at PPFAS is the foundational risk-management and entry-discipline principle that governs portfolio construction at PPFAS Mutual Fund across its scheme range, beginning with the flagship Parag Parikh Flexi Cap Fund launched on 24 May 2013. The doctrine, articulated by Benjamin Graham in Security Analysis (1934) and The Intelligent Investor (1949) as “the central concept of investment,” requires that any commitment of capital be made only at a price providing a meaningful discount to estimated intrinsic value, with the discount sized to absorb errors in valuation, deterioration in business fundamentals, and adverse market dynamics. At PPFAS, the doctrine is explicitly codified in the documented investment process published at amc.ppfas.com/schemes/investment-process/, articulated in monthly factsheet commentary by Chief Investment Officer Rajeev Thakkar , and operationalised through entry-point discipline across the Parag Parikh Flexi Cap Fund , the Parag Parikh ELSS Tax Saver Fund , the Parag Parikh Conservative Hybrid Fund , and (with category-specific adaptations) the Parag Parikh Arbitrage Fund and the Parag Parikh Liquid Fund .