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ITM Options or the Future

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ITM Options or the Future

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Posts: 112 since Aug 2009


What to choose ?

Directional trading can be done with naked options and futures. Are there traders here which trade direction with itm options and why did you choose the itm options and not directly the future ?

Are there any strategy decisions behind that ( Hedging ) or is it just because you love options or what gives the advantage or disadvantage of choosing either the option or the future ?

If I think about the delta, I am clear that the future has a delta of 100 and the itm option between 51 - 100, depending on how deep we go in the money. The more delta, the more it moves like the underlying. Theta, gamma and vega are other factors to consider.

Some say, that trading the naked future is more risky compare to naked itm options. But now let me consider this : If we take the risk to trade the deep itm option we also have to apply our rules like we have to do when we take the risk to trade the future. We will also use a stop loss, we will define an exit point, we will define a trend follow rule and so on. With the stop loss we can define the risk and we even can make that equal for the option and the future by risking the same specific amount of money.

So, what makes it worth to trade the itm option and not direct the future ?

What do I miss or fail to see in my considerations ?


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