Buying Deep ITM Options – The Setup No One Talks About?

26 Apr

Hello Traders!
When it comes to option buying, most traders are obsessed with OTM and ATM strikes for low premium and high returns. But very few talk about the hidden power of Deep In-The-Money (ITM) Options. Today, I’ll share a high-conviction directional setup where buying deep ITM options gives cleaner execution, better control, and higher probability of success — especially when you’re confident in trend direction.

Why Deep ITM Buying is a Game-Changer

• Delta Advantage (0.8 to 1.0): Deep ITM options move almost 1:1 with the underlying, giving stock-like movement with less capital.
  
  
• Less Impact of Theta Decay: Since time value is minimal, decay doesn’t hurt as much as OTM options.
  
  
• Better Risk Management: With high delta and low extrinsic value, your SL and targets become more accurate.
  

The Ideal Setup to Buy Deep ITM Options

1. Step 1 – Identify a Strong Trending Day
   → Look for higher highs + higher lows (for longs), or lower highs + lower lows (for shorts)
   
   
2. Step 2 – Entry on Break + Retest or Trend Continuation Candle
   → Use price action patterns like bullish engulfing or breakout of flag pattern
   
   
3. Step 3 – Choose Deep ITM Option with 0.8–1 Delta
   → E.g., if Nifty is at 23,800, pick 23,300 CE or lower and do same for PE side as well.
   → You’re treating it like equity but with leverage
   
   
4. Step 4 – Risk-Reward & SL
   → SL just below structure (candle or VWAP)
   → RR should be minimum 1:2
   

Real Example(Nifty Chart Study)

• On 25th April 2025, during the first half of the session, Nifty dropped by 444 points, and the Deep ITM PUT Option (24800PE) moved up by 430 points.
  
  
• Later in the second half of the session, Nifty recovered by 277 points, and the Deep ITM CALL Option (23300CE) moved up by 250 points.
  
  
• Notice how the Deep ITM options mirrored the index move almost 1:1, showcasing high delta impact with precision.
  

When NOT to Use This Strategy

• Choppy or Low Volume Days: Deep ITM options need strong movement — sideways markets will kill the move.
  
  
• High IV Environment (VIX > 15): Entry premiums may be inflated, making SL management tricky.
  

Rahul’s Tip
“If you’re 80% confident in your directional view, go Deep ITM instead of gambling with OTM.”
It’s how pros manage both reward and risk without getting crushed by decay.

Conclusion
Deep ITM Option Buying is rarely discussed but extremely powerful when used with clean setups and directional conviction. It behaves like equity, gives better control, and is ideal for short-duration intraday moves with high accuracy.

Have you ever tried Deep ITM options? Share your experience — let’s learn from each other in the comments!

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1 Mei

Nota

Big thanks for the amazing response on – Deep ITM Strategy!
Deep ITM Options – Part 2 Coming Soon
Scalpers vs Swing Traders — who wins with Deep ITM?

• Catch fast 10–20 point scalps OR ride big 200+ point swings
• Best entry zones, time windows & SL tricks — all coming in Part 2
• If you liked Part 1... get ready, this one’s even sharper
• Follow now so you don’t miss the drop