How Does Trading Deep-in-the-Money Options Compare to Trading the Underlying Asset Directly?

Trading a deep-in-the-money (DITM) option can be a capital-efficient substitute for trading the underlying asset. A DITM option's price consists almost entirely of intrinsic value and moves nearly point-for-point with the underlying asset (its delta is close to 1.0).

This allows a trader to achieve a similar profit potential as holding the asset but with a significantly lower initial investment. However, DITM options still have an expiration date and some time value, which will decay, representing a cost not present in direct asset ownership.