# Why Would a Trader Buy an OTM Option? ⎊ Path

**Published:** 2025-12-04
**Author:** Greeks.live
**Categories:** Path

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## Why Would a Trader Buy an OTM Option?

A trader buys an OTM option because they are cheap, offering high leverage and a large potential return if the underlying asset's price makes a significant move. It is a speculative bet on a strong directional move, with the loss limited to the small premium.

- [How Does the Term “Speculative” Relate to the Expectation of Profit?](https://learn.greeks.live/path/how-does-the-term-speculative-relate-to-the-expectation-of-profit/)

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- [What Is the Risk-Reward Profile of a Protective Put versus a Covered Call?](https://learn.greeks.live/path/what-is-the-risk-reward-profile-of-a-protective-put-versus-a-covered-call/)

- [Why Would a Trader Buy an Out-of-the-Money (OTM) Call Option?](https://learn.greeks.live/path/why-would-a-trader-buy-an-out-of-the-money-otm-call-option/)

- [What Is the Difference in Maximum Loss between Buying an OTM Option and Buying an OTM Future?](https://learn.greeks.live/path/what-is-the-difference-in-maximum-loss-between-buying-an-otm-option-and-buying-an-otm-future/)

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## Discover More

### [How Would Technical Analysis Be Viewed under the Weak Form of the Efficient Market Hypothesis?](https://learn.greeks.live/path/how-would-technical-analysis-be-viewed-under-the-weak-form-of-the-efficient-market-hypothesis/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Would Technical Analysis Be Viewed under the Weak Form of the Efficient Market Hypothesis?](https://learn.greeks.live/wp-content/uploads/2025/10/Crystalline-Pyramidal-Volatility-Proxy-Mounted-on-Decentralized-Ledger-Hardware-Interface-Analysis.webp)

Weak-form EMH says all past price data is already in the price, making technical analysis a useless art.

### [How Does a "Buy-Write" Order Relate to a Covered Call?](https://learn.greeks.live/path/how-does-a-buy-write-order-relate-to-a-covered-call/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does a "Buy-Write" Order Relate to a Covered Call?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Engineering-of-Digital-Asset-Futures-Contract-Settlement-Mechanism-Visualization.webp)

A single, simultaneous order to buy the underlying asset and sell a call option, efficiently establishing a covered call position.

### [What Is the Maximum Loss a Buyer of an OTM Option Can Incur?](https://learn.greeks.live/path/what-is-the-maximum-loss-a-buyer-of-an-otm-option-can-incur/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Maximum Loss a Buyer of an OTM Option Can Incur?](https://learn.greeks.live/wp-content/uploads/2025/10/Layered-Synthetic-Material-Geometry-Suggesting-Collapsed-Volatility-Surface-In-Decentralized-Derivatives-Protocols.webp)

The premium paid for the option contract; risk is limited to the cost.

### [What Is the Relationship between an Option's Delta and Its OTM Status?](https://learn.greeks.live/path/what-is-the-relationship-between-an-options-delta-and-its-otm-status/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Relationship between an Option's Delta and Its OTM Status?](https://learn.greeks.live/wp-content/uploads/2025/10/Teal-and-Ivory-Casing-Interface-Analyzing-Hinge-Mechanism-Securing-Digital-Asset-Custody-Structures.webp)

An OTM option has a Delta close to zero, meaning its price is less sensitive to changes in the underlying asset's price.

### [What Is the Likelihood of an OTM Option Being Exercised?](https://learn.greeks.live/path/what-is-the-likelihood-of-an-otm-option-being-exercised/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
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The likelihood is extremely low because exercising an OTM option results in a loss; it is usually left to expire worthless.

### [Why Do OTM Options Still Have a Small Amount of Time Value?](https://learn.greeks.live/path/why-do-otm-options-still-have-a-small-amount-of-time-value/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Do OTM Options Still Have a Small Amount of Time Value?](https://learn.greeks.live/wp-content/uploads/2025/10/Macro-Analysis-of-Tokenized-Asset-Structure-Fluctuation-Indicating-Liquidity-Pool-Instability.webp)

OTM options have time value because there is a non-zero probability they will move in-the-money before the expiration date.

### [Under What Specific Condition Would the Value of a European Option Equal That of an American Option?](https://learn.greeks.live/path/under-what-specific-condition-would-the-value-of-a-european-option-equal-that-of-an-american-option/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
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Their values are equal when the underlying asset pays no cash flows or dividends, making early exercise non-optimal.

### [How Does Delta Differ between an ITM and an OTM Call Option?](https://learn.greeks.live/path/how-does-delta-differ-between-an-itm-and-an-otm-call-option/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does Delta Differ between an ITM and an OTM Call Option?](https://learn.greeks.live/wp-content/uploads/2025/10/Macro-Visualization-of-Crystalline-Volatility-Orb-on-Asymmetric-Digital-Ledger-Architecture.webp)

ITM call Delta is near 1.0 (high sensitivity); OTM call Delta is near 0.0 (low sensitivity).

### [Why Do Traders Often Sell OTM Options Instead of Buying Them?](https://learn.greeks.live/path/why-do-traders-often-sell-otm-options-instead-of-buying-them/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Do Traders Often Sell OTM Options Instead of Buying Them?](https://learn.greeks.live/wp-content/uploads/2025/10/Abstract-Visualization-of-Volatility-Skew-and-Implied-Volatility-Surface-Dynamics-in-Decentralized-Finance-Instruments.webp)

Traders sell OTM options to collect premium and profit from time decay (Theta), as most OTM options expire worthless.

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