What is the reason that the intrinsic value of options contracts can never be Negative ?

The intrinsic value cannot be negative. It is positive if the option is in money (ITM), and zero if it is out of money (OTM). It cannot be less than zero.

An option contract's intrinsic value is the amount a trader would receive if it was exercised today.

Call options have an intrinsic value that is calculated as follows:

Intrinsic value is equals to : Spot price - Strike price

The intrinsic value of put options is calculated as follows:

Intrinsic valueis equals to : Strike price - Spot price

Let's now understand why intrinsic value can't be lower than zero.

Options contracts allow traders to choose whether or not they want to exercise the contract. The trader will only choose to exercise an option or make a profit if the decision is profitable. He would not allow his options to expire if he was in loss and would lose the premium he paid for the option. He will not lose more than the premium he paid for the contract.

 For an example - Let's suppose you purchase a call option on ABC stock at a strike price Rs 200. As a premium, you paid Rs 10 per share. You expect the ABC stock to rise. It currently trades at Rs 195. To be profitable, it must reach Rs 200.

Let's say that at the end the month it stays at Rs 196. It is unlikely that any trader will exercise it. It is not possible because you would have to pay Rs 200 to buy stock that is Rs 196. The trader will either exercise his option or choose to not exercise the contract, and the option will be allowed to expire without any compensation.

He will lose Rs 10 premium, so it is possible to say that his trade was negative. However, the intrinsic value of options never drops below zero.