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Is it better to buy ITM options than trade futures?

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Yes, there are several advantages to trading ITM options as compared to futures:

  1. The upfront margins required to buy options are far lesser than futures (SPAN). Hence, you can buy more lots with options with the same capital. For example, Bank Nifty is at 22700 (Approx) if you want to buy 1 lot of Bank Nifty September 2020 futures, you will need ₹1,30,000. To buy one lot of 22000CE of the same expiry costs around ₹26,000. So, with the margin amount you need to buy 1 lot of futures, you can buy 5 lots. If you choose a deeper ITM option like 21000CE, you can still buy 2 to 3 lots with the same amount.  
  2. More choices available as you can pick from various strike prices as the margin requirements vary a lot.
  3. No MTM settlement since 100% premium is paid upfront. The broker's RMS team won't have a reason to cut your naked option buy positions.
  4. Your risk is limited to the amount you have paid as upfront margins. Very little chance of losing more than 100% of your capital (Can happen if you place market orders in illiquid options). In futures, you can lose all your capital and more (Especially overnight positions).
  5. Since ITM options have high delta. increasing your odds of making money if you're on the right side of the market as compared to OTM options. To learn more about it, read this chapter.182
  6. Less time decay enhances your holding capacity. To learn more about this, read this chapter on Theta115.

While trading options is better in many ways, make sure to watch out for the liquidity and open interest in the contracts before initiating positions. December onwards, intraday leverage for F&O will be reduced in a phased manner as per the recent SEBI regulations on upfront collection of margins119. Futures traders can make use of ITM options to circumvent the impact in an efficient way. If you are new to options, I strongly recommend you to read this module168 before getting started.