Calculations for profit, break even points, and risk are the same. Is there any reason you definitely want to go ITM, ATM, or OTM?
Without double checking (probably a mistake on my part lol), I think OTM butterflies using Calls are Bullish, OTM Butterfiles using puts are bearish, etc. So that is the reason. Neutral butterflies are created by using ATM options. ITM would be used if you wanted to make a bearish one with Calls or Bullish with puts, etc. Stock at $50 If you expect the stock to go to $60, you would use OTM Calls - if you used ATM calls and the stock goes to $60, you would lose the investment. JJacksET4
ATM Butterflies should cost the most. If you want to be neutral in direction, then choose ATM Butterflies. Use higher strike price Butterflies for bullish bias and lower strike price ones for bearish bias. OTM put Butterfly is equivalent to ITM call Butterfly and vice versa (ATM is also equivalent), if using the same strike prices for the legs. Use OTM Butterflies for better fills, so OTM call Butterfly for bullish bias or OTM put Butterfly for bearish bias.