When you’re confident about a stock but don’t want to tie up huge amounts of capital, deep in-the-money (ITM) calls are one of the smartest options strategies available. These contracts give you stock-like exposure while reducing both cost and risk.
Rick Orford recently broke this down in one of our most popular Barchart YouTube videos — here are the highlights.
1. Why Deep In-The-Money Calls Work
- High Delta: Deep ITM calls often have delta values of 0.70, 0.80, or higher. That means the option price moves nearly dollar-for-dollar with the stock. It feels like stock ownership, but with more leverage.
- Capital Efficiency: Each option controls 100 shares. Instead of paying $6,071 for 100 shares of a stock like Super Micro Computer (SMCI), as in Rick’s example, you could buy a $45 call for $1,810. Same exposure, less upfront capital.
- Downside Protection: Unlike buying shares outright, your maximum loss is limited to the premium paid.
2. Less Time Decay
Options lose value as expiration approaches (thanks to time decay), but deep ITM calls have less extrinsic value. That means they hold their value longer, which is especially useful for:
- Longer-term bullish strategies
- LEAPS (1+ year calls)
- High-conviction trades where you want to minimize time decay drag
3. A Practical Example on SMCI
- 100 shares of SMCI (price at recording: $60.71) = $6,071
- $45 strike deep ITM call: $1,810
The deep ITM calls offer the same directional upside, but at a fraction of the cost — and with capped downside risk.
If SMCI rises, your deep ITM call rises almost as much as the stock itself thanks to its high delta.
Bottom Line
Deep ITM calls aren’t about speculation. They’re about reliability and efficiency. They allow traders to:
- Capture stock-like gains
- Risk less capital
- Minimize time decay
Check out the quick explainer here:
Then, watch Rick’s full lesson on YouTube to learn more about how to get stock-like gains with less risk.
Explore Barchart’s Long Call Screener to find the best candidates for your next trade.
