Hi - I'm also new. I had the exact same question. I found the following definition - but it's not too easy to digest:

"Parity plus basis. The intrinsic value of an option (parity) plus the fair value basis on the forward underlying the option contract. A European option should not sell for less than its forward intrinsic value in an efficient market. The forward intrinsic value of a call is always above the traditional intrinsic value measurement, except in some cases when there is a dividend to be paid prior to expiration. The forward intrinsic value of a European put is always less than the put's traditionally measured intrinsic value, except when there is an impending dividend"

But my question is, should I be looking for stocks that have a 'Forward Intrinsic Value' that is higher than that of the current trading price?

Many Thanks,

Cyrus

Welcome ctavakoli, please note the definition you posted is for a stock option's intrinsic value. That is something completely different.

For a definition of a stock's intrinsic value and how it's calculated in a Graham context:

http://www.grahaminvestor.com/articles/finding-undervalued-stocks-intrinsic-value

The relevant pages in The Intelligent Investor are within Chapter 11: "Security Analysis for the Lay Investor" under the heading "Capitalization Rates for Growth Stocks".

Also see: http://en.wikipedia.org/wiki/Benjamin_graham_formula

Regards, TGI

Buffett looks at the predictability of these future earnings values.

Reason he buys moats.

If you read the Mary Buffett books on Warren Buffett, you will find another way to figure IV.

It is what Buffett uses today. It really means nothing unless the stock has a high predictability of earnings.

Who really knows what a stock is going to do in the future.

Real value is not found at all time highs in the market.

1974 crash was the best ever. single diget pe,s.