I’ve been focusing on short-term trades lately. I’m curious if in the money calls are more effective compared to out of the money options.
I typically choose cheaper options but have heard that ITM could provide more safety for quick trades. Is the higher cost really justified?
Higher cost makes sense for quick trades since ITM options track the underlying asset better. When you’re trading fast, you want that direct movement instead of betting on huge swings.
OTM options work but need bigger price moves to profit. For quick trades, that extra risk usually isn’t worth saving on entry cost.
The ITM premium gives you way better control over how your trade plays out.
ITM options move 70-80% with the underlying stock. OTM options give you 20-30%. For quick trades, you need that reliable correlation, not a lottery ticket. Data supports this for trades under 24 hours.
Blew $400 last month being cheap with OTM calls on a scalp. Stock went exactly where I called it but my options didn’t move.
Went ITM after that beating. Costs more upfront but the movement actually makes sense.
Win rate went from 40% to 65% on day trades once I started paying for decent delta.
Been using ITM calls for 8 months now. Worth the extra cost for quick trades.
ITM options track the stock price way better, so you get more predictable moves. Yeah, you pay more upfront, but theta doesn’t crush you as hard on quick trades. Makes total sense when you’re not fighting time decay.
I go ITM when I’m holding less than a day. Delta’s usually 0.7-0.8, so the option moves 70-80 cents for every dollar the stock moves. OTM might pay off if you nail a big move, but most of the time you’re just watching premium bleed away.
Pay extra for ITM on quick trades. The safety’s worth it.