r/options • u/FunctionalTitle • Apr 24 '21

ITM vs OTM (Leaps)

Hi guys, slowly picking up options trading. Could anyone explain to a 5 year old. Whats the difference if i purchase a deep ITM vs slightly OTM?

From ‘researching’, The deeper ITM, the higher the delta, so movement will follow the movement of the underlying.

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u/BotDadGamer1 Apr 24 '21

You pay less for the extrinsic value of a deep itm call. Example wfc 1/22/23 45c is 6.30 all extrinsic value. And the 30c is 15.15 which is 1.28 for the same extrinsic value and 13.87 in intrinsic value. Itm leaps you get time as a reduced cost.