What Is the Primary Risk Associated with Trading Deep Out-of-the-Money Options? ▴ Learn

What Is the Primary Risk Associated with Trading Deep Out-of-the-Money Options?

The primary risk is that the option will expire worthless, resulting in the total loss of the premium paid. Deep OTM options have a very low probability of moving In-The-Money before expiration, meaning the likelihood of a 100% loss on the premium is high.

They require a significant and rapid price move in the underlying crypto to become profitable, making them highly speculative.

How Does the Delta of a Deep Out-of-the-Money Option Behave When Gamma Is near Zero?

Define “In-the-Money,” “At-the-Money,” and “Out-of-the-Money” for a Written Call Option

What Is Meant by an Option Being ‘In-the-Money’ (ITM), ‘At-the-Money’ (ATM), or ‘Out-of-the-Money’ (OTM)?

Does a Drop in Volatility Have the Same Impact on In-the-Money and Out-of-the-Money Options?