You don't really buy ITM Options. Option traders usually get involved in OTM or ATM options. ITM is like gettin' the underlying.
Yeah, they're proxies. I was joking with Mav. IOW, stating a 200-pt ITM option (non-zero NPV) would have a +NPV, but not return. FWIW, I probably trade 600-700 ITMs a day.
How would it have a positive NPV? You have to "subtract" cost, in this case, the 200 pt ITM premium from the cash flows. Your future stream of cash flows should be valued off a random walk model meaning the NPV by definition should be exactly zero unless you feel the option is mispriced.
Sorry, not +NPV, and it would be discounted by carry (being that ITM). I was typing on the iPad. I mean non-zero value (intrinsic) as a joke.