How Does 'In-the-Money' (ITM) Options Liquidity Compare to OTM Options Liquidity? ▴ Learn

How Does ‘In-the-Money’ (ITM) Options Liquidity Compare to OTM Options Liquidity?

ITM options are generally more liquid than OTM options. This is because ITM options have intrinsic value and a higher probability of expiring profitably, making them more attractive for hedging and speculative purposes.

Higher demand leads to more active trading, resulting in deeper order books and tighter bid-ask spreads. The tighter spreads mean lower potential slippage compared to the illiquid OTM contracts.

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