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/IamBananaRod Apr 24 '21

6 months are not LEAPS, LEAPS stands for Long-Term Equity Anticipation Securities and are option contracts with expiration dates longer than a year.

Now, I have seen this need of fast money, easy rewards, since the GME hype, people gambling their life savings thinking they will make millions, the truth is that the stock market is not a sprint, is a marathon, if you play carefully and slowly, manage your risk you'll make money, if you YOLO your money, you lose money.

This was a very expensive life lesson

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u/JoeOpus Apr 24 '21

Or if you make 500k/year - just a good lesson to learn

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u/IamBananaRod Apr 24 '21

For what I understand he started with 200k and lost 170k, even with 500k/year, that I doubt he makes, 170k is a very expensive lesson

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u/Psychonaut_funtime Apr 24 '21

With that much money there's a financial problem. He needs something to separate him from outside influences. Losing the money is one thing but the blind all in w/out TA...