WebLet's look at a deep OTM call. The intrinsic value = $0. It's less likely that the stock price will go up to reach the deep OTM strike price than $77. Thus, the "potential" value of the deep OTM call must be even less than that of the $77 call. So the extrinsic value << $1 (and > $0). Now let's look at the $73 call. WebMar 20, 2013 · Basically when you buy a deep in the money call option, you are buying the stock almost outright, a deep in the money call option is a stock replacement strategy, because the option moves almost 100% in correlation with the underlying’s stock move.

Options Strategy - Deep ITM $SPY calls : r/options - reddit

WebAug 10, 2007 · I buy deep in-the-money calls as an alternative to the outright purchase of common stock so that I can capture the bulk of a stock's move in a shorter time frame. … For instance, suppose a trader buys one call option on ABC with a strike price of $35 with an expiration date one month from today. If ABC's stock trades above $35, the call option is … See more cooking with bree

Out-of-the-Money or In-the-Money Spreads? How to Choose

WebThe alternative to selling a call option is to buy one. Buying a call option would make sense if you believe the underlying stock will rise above the strike price. Your risk is … WebThe deeper ITM an option, the more it resembles the return of the underlying shares. Call options do not receive dividend distributions. Read the prospectus on $SWAN (like 3 pages). There are reasons for deep ITM options- mostly tail risk or small high risk position Balanced by a large low risk position. WebJun 23, 2024 · When you sell an OTM put vertical, that’s synthetically the same as buying an ITM call vertical with the same strike prices. Both verticals are theta positive, meaning that as time passes, all else being equal, time decay works for you rather than against you. For the most part, the same risk means the same reward. cooking with breeo