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(1) Trading Costs: Since an ITM strategy has more positions called out at the end of the month, trading costs often be higher. In a scenario where the stock is flat, delta 8 it'll be two stock orders and on option order for an ITM position vice on stock order and one option order in an OTM position.

(3) Since in an ITM strategy, you become called out more frequently at the final of the month, realize that some need to examine more positions every month. This will take more of the time (whether this is nice or bad depends on you). Within an OTM strategy, you will more often NOT be called on the net. Then you would simply sell another option on tennis shoes stock a good-looking lawn give the highest premium. Great deal time since the majority of one's research time is around the stock, not the way to go.

In this breakdown we are looking purely at price in relation to your underlying asset. By doing this we can assess whether we can exit a do business with a profit, regardless of if it has actually reached the underlying strike price. However there is no hard-and-fast rule concerning using the delta. This is only one tool to an individual play with the ratio spread and adds another dimension to help you succeed in your trading.