Too much detail?
1 Comment

  • john smallberries - 12 years ago

    Perfect! Besides the confusing terminology (which you've blessedly simplified by eliminating words), I have been trying to understand why ITM vs OTM strikes would make any difference. I took away two reasons: tighter market making on lower-priced (OTM) options, and avoiding occasional early assignment on ITM puts. Neither of those is something I'd have figured out by staring at the options price table.

    Under this all-things-equivalent (mostly) view, are there reasons besides immediate pricing differences for preferring buying vs selling a spread having OTM strikes?

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