What Is the Significance of an Option Becoming “Deep in the Money”?

An option is "deep in the money" (DITM) when its intrinsic value is very high, meaning the strike price is far from the current spot price. DITM options behave much like the underlying asset, with a Delta close to 1 or -1.

They have very little extrinsic value, meaning they are less affected by Theta decay and changes in implied volatility. They are often used as a capital-efficient proxy for holding the underlying asset.