Why Is the Distinction between ATM and NTM Less Critical for Long-Term Options? ▴ Learn

Why Is the Distinction between ATM and NTM Less Critical for Long-Term Options?

The distinction is less critical for long-term options because the high time value (low Theta) means the option's moneyness state is less volatile and less susceptible to rapid decay. Long-term options have lower Gamma, so their Delta changes more slowly.

This reduces the immediate urgency of price movement, making the slight difference between ATM and NTM less impactful on short-term risk management.

Why Is Delta Typically Lower for Out-of-the-Money (OTM) Options?

Is It Possible for a Short-Term OTM Option to Have a Higher Absolute Theta than a Long-Term ITM Option?

What Is a Common Options Trading Strategy That Utilizes NTM Options?

Which Category, ATM or NTM, Is Likely to Have a Higher Gamma Value?