How do I choose the right strike price for option buying?

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When I buy options, how do I decide which strike price to use? ATM, ITM, or OTM?

#options-and-futures

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Wolf Cub

Trader · 15 days ago

ATM (At The Money): highest probability of profit percentage wise, highest theta decay. OTM: cheap but low probability, needs a big move. ITM: expensive, behaves more like the underlying, lower time value.

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Wolf Alpha

Trader · 15 days ago

For directional trades with a clear catalyst (earnings, event), OTM can give high leverage. For regular directional trades, ATM or slightly OTM (1 strike) is the sweet spot between cost and probability.

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How do I choose the right strike price for option buying?

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