Please help me out with this learning exercise. I have thought about this problem intuitively and would like input from other experts on this forum: IF one were to speculate on a stock/ETF (say I am bullish on SPY), which options/strike prices/expirations make the most sense for speculating in this scenario? I will start the discussion with a few things I could think of: 1. If I am buying options, deeply ITM options would cost more; therefore, for a given total amount at risk, the number of contracts would be less; therefore, lower commissions. Considering commissions, ITM better than ATM better than OTM. 2. For a favorable move in the underlying, % change in the value of options would be highest for OTM options. Similarly for an adverse price change in the underlying, OTM options would lose the most. Therefore, on a risk/reward basis: ITM (less risk/less reward) ATM (medium risk/medium reward) OTM (high risk/high reward) 3. The open interest/liquidity etc. of ATM options is likely to be highest. Therefore, the bid/ask spread can be expected to be the smallest for ATM options and comparatively higher for ITM and OTM options. Therefore, on a trade execution/best fill basis: ATM better than both ITM and OTM Can others share their opinions/comments and build on this list? Please remember that this is simple option buying strategy; complex strategies that require higher option trading level approvals are not available to everyone and therefore, will not be helpful here. Thanks.