The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to answer the question, “Is selling in the money or out of the money options safer?” And so, what do we mean by in the money or out of the money? Well, if you’re selling option contracts, we’re talking about the relationship between the strike price and the current stock price or current ETF price of the underlying. For example, if a stock is trading at $100, you could sell an out of the money call option at $105 or an out of the money put option at $95. Both of these strike prices would be out of the money on their respective ends. In the money contracts would be if you reverse the calls and puts. And so, if a stock is trading at $100, you might sell an in the money put option at $101 and you could sell an in the money call option at $99. Again, that's if the stock is trading at $100. So, to get back to the question, “Is it safer to sell in the money or out of the money?” Well, it’s all relative bas