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How Does the Probability of Exercise for a Deep OTM Option Compare to an ATM Option?

Deep OTM: Extremely low (near zero). ATM: Highest (approx. 50%).
Greeks.Live14.11.25

How Does the Probability of Exercise for a Deep OTM Option Compare to an ATM Option?

The probability of exercise for a deep OTM option is extremely low, approaching zero, as the underlying price must move significantly to reach the strike. An ATM option has the highest probability of exercise, approximately 50% for the option to move ITM and be exercised.

The difference is stark, reflecting the difference in premium and risk profile.

What Is the “Gamma” of an Option and Why Is It Highest for ATM Options?
Why Do ATM Options Generally Have the Highest Time Value?
What Is Delta and How Does It Relate to an Option Being ITM, OTM, or At-The-Money (ATM)?
Which Option ‘Moneyness’ Typically Has the Highest Gamma?

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