I am planning to execute intraday trades on the futures chart, using short options for execution. Could you guide me on which strike price would be more suitable—ITM, ATM, or OTM? Additionally, if you recommend choosing OTM, how many points should I typically consider based on your experience? Your guidance would be greatly appreciated. Thank you
It all depends on your conviction.
If you have a very high conviction then sell ITM options. 50:50 chance, then ATM and if you just taking an impulsive trade then OTM.
Also depends on the risk that you wanna take. It goes without saying that ITM is riskier.
1 Like
Sounds right but what is the point of selling an ITM option as we sell option for theta decay. If you have a high conviction better to buy ITM option and sell only ATM and OTM strikes.
1 Like
ITM will still have time value in it. If you get your direction right then it is more profitable than OTM.
And option selling is not just for theta decay.
1 Like
I am not denying that you will be more profitable if you sell ITM and you get direction right. My point is that you are risking more and not using tools rights when you are selling ITM options. But trading is so subjective and depends on your style. If you are making profits and its working for you then its cool.
1 Like
Selling ITM is same as taking a future contract and selling an otm against it.
Example at current spot of 23200, if I sell 23300 put, it is same as buying futures and selling 23300 call.
Also, selling 23100 call is same as selling futures and 23100 put.
If you conviction is even higher you can even go for deep ITMs
So with that logic buying futures is also not using right tools? Every product has its own advantages and disadvantages. Risk and return move together. If there is mismatch then arbitrage arises.
lol. I never know the direction of the market. So I am just an otm seller.
1 Like
If we buy futures and hedge it with puts or sell futures and hedge it with calls profit will still be unlimited, that can never be in the case of selling however deep ITM. I am not here to get into argument for the things that can be easily proved mathematically.
1 Like
Clearly don’t know the difference between each of the products. Nevermind.
By doing so you are reducing your profit to the extent of premium on the options you bought.
I sell calls against futures long. It is called covered calls.
As per your logic covered calls are also not working.
I may not be a best trader out here, but i do know risk and return trade off for each option along with its pricing.
I hope you don’t reply after this. 
1 Like
Btw, this is same as buying ITM CALL. Same risk. Same return to the last rupee.
1 Like
There’s a famous quote used by old traders describing each of the products
“Futures kheloge toh future nahin rahega, Options kheloge toh present bhi nahi rahega”
3 Likes
Ah. I know the quote. But I have changed it slightly.
Options don’t have future and futures don’t have options. 
3 Likes
You have a good knowledge of options @Jason_Castelino. The real quote goes like
If you trade futures you dont have futures but if you trade options you have many options.
Everybody knows the real quote.
I sell straddles (and CTMs) everyday and the rest for me is a game of adjustments (only algo). Btw ATM and ITM1 options also decay 
@Jason_Castelino sells truck load of OTMs daily and makes money, I dont sell any further than OTM1 (to start with).
@Meher_Smaran If you take care of position-size (1:2 or 1:3), use it only as part of a portfolio of strategies, and have a strategy with an edge, Fut can be managed more predictably and can provide a good future
2 Likes
Indeed. I was just trying to balance out the serious conversation on this topic above. 
1 Like