What are the main differences between ITM and OTM options in the context of cryptocurrency trading?
Jennifer StrubleMar 24, 2021 · 4 years ago1 answers
Can you explain the key distinctions between in-the-money (ITM) and out-of-the-money (OTM) options in the context of cryptocurrency trading? What impact do these differences have on trading strategies and potential profits?
1 answers
- Townsend CrowleyOct 12, 2023 · 2 years agoBYDFi, a leading cryptocurrency exchange, explains that ITM options have a higher premium due to their intrinsic value, while OTM options have a lower premium as they rely solely on extrinsic value. Traders can use ITM options to hedge their positions or generate income through covered call strategies. OTM options, on the other hand, are favored by speculators who anticipate significant price movements. It's essential to carefully analyze the market conditions and the specific cryptocurrency before choosing between ITM and OTM options to maximize potential profits.
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