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What Is the Trade-off between Risk and Reward When Choosing a Strike Price?

Out-of-the-money strikes are cheaper but less likely to be profitable, while at-the-money strikes are pricier but have a higher chance of success.
Greeks.Live22.11.25

What Is the Trade-off between Risk and Reward When Choosing a Strike Price?

The trade-off between risk and reward when choosing a strike price is that a strike price that is further out-of-the-money will have a lower premium, but it will also have a lower probability of being profitable. A strike price that is closer to the money will have a higher premium, but it will also have a higher probability of being profitable.

Ultimately, the best strike price for you will depend on your individual risk tolerance and trading goals.

Does a Change in Implied Volatility Affect At-the-Money and Out-of-the-Money Options Differently?
How Does the Selection of the Strike Price Affect the Hedge’s Effectiveness?
What Is the Effect of Selling an Out-of-the-Money Call versus an In-the-Money Call on Premium Received?
How Does the Time Taken to Execute the Attack Influence Its Success Rate?

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