The value provided by a formula for pricing a call option. Uses the stock price, the exercise price, the risk-free interest rate, the time to expiration, and the expected dividend distributions over the time to expiration. Implicitly, it assumes the expected standard deviation of the stock return over the time to expiration (also known as stock price volatility) is zero.
In the case of stock not expected to pay dividends, the minimum value may be computed using the Black-Scholes formula and assuming a stock volatility of zero. Alternatively, the minimum value can be computed as the the current price of the stock reduced by the present value of exercise and dividends expected to be distributed before exercise.
SFAS No. 123 permits companies to compute option expense for income statement purposes based on the minimum value.