The option premium can be broken down into two components- intrinsic value and time value. The intrinsic value of a call is the amount the option is ITM, if it is ITM. If the call is OTM, its intrinsic value is zero. Putting it another way, the intrinsic value of a call is Max [0, (St – K)] which means the intrinsic value of a call is the greater of 0 or (St – K). Similarly, the intrinsic value of a put is Max [0, K – St], i.e., the greater of 0 or (K – St). K is the strike price and St is the spot price.