What are the advantages of ITM vs OTM options in the cryptocurrency market?

3 answers

• Dec 19, 2021 · 3 years ago
  In-the-money (ITM) options in the cryptocurrency market refer to options contracts where the strike price is lower than the current market price of the underlying asset. These options have intrinsic value and provide traders with the opportunity to profit immediately by exercising the option or selling it at a premium. The main advantage of ITM options is that they offer a higher probability of profit since they are already in a profitable position. Traders can benefit from the price movement of the underlying asset without needing a significant price change. This can be particularly useful in volatile cryptocurrency markets.
  633317
• Dec 19, 2021 · 3 years ago
  On the other hand, out-of-the-money (OTM) options have a strike price that is higher than the current market price of the underlying asset. These options do not have intrinsic value and are purely speculative. The advantage of OTM options is that they are cheaper to purchase compared to ITM options. Traders can potentially achieve higher returns if the price of the underlying asset moves significantly in their favor. However, the probability of profit is lower compared to ITM options since the price needs to move significantly to become profitable.
  554185
• Dec 19, 2021 · 3 years ago
  From a third-party perspective, BYDFi, a leading cryptocurrency exchange, offers both ITM and OTM options to its users. Traders can choose the type of option that aligns with their trading strategy and risk tolerance. ITM options provide a more conservative approach with higher probability of profit, while OTM options offer the potential for higher returns at a lower upfront cost. It's important for traders to carefully consider their investment goals and risk appetite before deciding which type of option to trade.
  520130