Why Might a Speculator Prefer OTM Options over ITM Options?

A speculator might prefer out-of-the-money (OTM) options over in-the-money (ITM) options due to their lower cost and higher leverage. Because OTM options are cheaper, a speculator can buy more contracts for the same amount of capital, amplifying potential returns if their price forecast is correct.

While the probability of an OTM option expiring worthless is high, a significant move in the underlying asset's price can lead to a much larger percentage gain on an OTM option compared to a more expensive ITM option.