(i) Day Trading
– Uses the underlying instrument with the highest possible delta (trade the stock, NOT the option)
(ii) Short term Trading (1 to 2 weeks)
– Can buy short term
– In-the-money option
– Large delta (respond closely to the movement of the underlying)
(iii) Intermediate term Trading
– Can use lower delta due to longer trading period
– Large moves might happen due to longer trading period
– trade at-the-money option
(iv) Long Term Trading
– use even lower delta
– at-the-money option
– LEAPS option