0DTE Strike Selection: ITM vs ATM vs OTM (What I Actually Buy)

New traders obsess over direction. "Is $SPY going up or down?"

Veterans obsess over strike selection. Because being right on direction and wrong on the strike is the same as being wrong.

I learned this the expensive way. Early in my 0DTE journey, I had a perfect read on a reversal. Price did exactly what I expected. My option went nowhere. I sat there confused until someone older than me said: "You bought a strike with no chance. Read was right, ticket was wrong."

That day rewired how I trade. Let me rewire yours for free.

ITM, ATM, OTM: the quick version

Let me define these without the textbook coma.

A call option is in-the-money (ITM) when the strike is below the current price. At-the-money (ATM) when the strike is right around the current price. Out-of-the-money (OTM) when the strike is above the current price. Flip it for puts.

That's it. Now here's what matters for 0DTE:

• ATM: roughly 50 delta. Tightest spreads. Cleanest, most honest move with the underlying.
• ITM: higher delta, heavier price, less theta bleed relative to the premium you paid.
• OTM: cheap for a reason. Low delta, theta eating it alive every minute, and on expiration day that decay is brutal.

The strike you pick decides how your option behaves. Choose wrong and your great read dies anyway.

Why ATM is my default

Nine times out of ten, I buy the ATM strike.

Why? Because ATM options are the fairest trade on the board. The bid-ask spread is tightest there. The delta is honest, around 50, so every point of $SPY movement actually shows up in your option. And you're not overpaying for the privilege.

On 0DTE, time is burning. Theta is your enemy every single minute. ATM strikes give you the most delta for the fight without the lottery-ticket nonsense.

My rule is simple: unless I have a specific reason to go ITM, I'm ATM. Default. Done. No emotional negotiation.

This is also why I trade $SPY instead of some thin name. The liquidity on $SPY options is the best in the game, and the ATM spreads are pennies. I covered the mechanics of 0DTEs in detail in my $SPY 0DTE options trading guide, and the Greeks that govern all of this in my 0DTE options Greeks breakdown.

Want to watch me pick strikes live? I call every trade, strike and all, in real time inside the free Bulls Corner Discord. Get in free here, just drop your email and you're inside.

When I go ITM: high conviction only

ITM is for the setups I'd bet the account on if that were responsible.

Here's the math that matters. On a same-day option, an ITM contract carries heavier delta, meaning it moves closer to point-for-point with the underlying. And because you're paying more intrinsic value, theta eats a smaller percentage of what you paid. The decay is still there, but it hurts less.

So when do I pay up for ITM?

The setup is A+. All four PSS steps confirmed. Liquidity Sweep, Directional Shift, Structure Break, clean High-Value Zone entry. If I ever feel certain about a trade, this is the one.

I need the move to be efficient. On ITM, I don't need a massive run to get paid. The delta is working for me harder than ATM.

My checklist:

• Is this an A+ graded setup, not just a "looks good"?
• Am I willing to pay the bigger premium because the probability justifies it?
• Is the spread still tight enough to get a clean fill?

Three yeses and I'll go one or two strikes ITM. Anything less than three yeses, I'm ATM.

OTM: the lottery ticket that bankrupts people

Let me be blunt about OTM 0DTE.

That cheap premium isn't a deal. It's the market telling you exactly what that option is worth at expiration. Almost nothing.

The trap works like this. You see an OTM call for a fraction of what ATM costs. You think "I can buy ten of these for the price of two ATM." So you do. Then $SPY moves exactly like you predicted, up a solid chunk, and your OTM contracts barely budge. Or they spike briefly and theta vaporizes them while you hold for "just a little more."

I've watched traders stack OTM 0DTEs like scratch tickets. Same energy, same result.

Here's my honest rule on OTM: if you're buying far OTM on expiration day hoping for a miracle move, you're not trading, you're gambling. And the house edge is time decay.

When is OTM acceptable? One or two strikes OTM when the premium is reasonable and you have a genuinely fast mover lined up, like a strong Directional Shift with momentum behind it. Even then, I keep it to a fraction of my normal size. Never, ever the default.

The no-fly zone: deep OTM, pennies on the dollar, the "if $SPY just rips three points I'll be rich" trade. That trade funds my paycheck. Don't be the guy who funds mine.

My strike selection rules, all in one place

Here is the whole system. Tattoo it on the inside of your eyelids.

1. Default to ATM. Tightest spreads, cleanest delta, honestest trade. No special reason needed.

2. Go ITM only on A+ setups. Heavier delta, less theta pain, bigger premium that I only pay when the grade justifies it.

3. OTM is the exception, never the plan. One or two strikes out, small size, fast mover required. Deep OTM lottery tickets are banned from my trading plan permanently.

4. Match the strike to the setup grade, not your mood. Feeling frisky is not a reason to go OTM. Being scared is not a reason to overpay for deep ITM. The setup grade decides. You execute.

5. Check the spread before you click. Wide spread means illiquid strike. Skip it or step one strike closer to ATM. On 0DTE, the fill is part of the edge, and I wrote a full breakdown of how I get clean fills on 0DTE because this alone saves traders thousands.

Pick the strike like a pro

Direction gets the glory. Strike selection gets the money.

ATM is my default because it's the fairest fight. ITM is my weapon for the A+ setups where I want every drop of delta. OTM is a lottery ticket that quietly drains accounts, and I treat it that way.

Rule for life: pick the strike that matches the setup grade, not your mood.

If you want to see me grade setups and pick strikes in real time, I do it every morning on $SPY and $QQQ 0DTEs. The free Discord is where it happens, join free.

And if you want the whole system, every setup, every alert, plus my full course: the 7-day free trial gets you inside Premium free for a week.

See you at the next sweep.

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Free download: Want my complete 0DTE starter system as a PDF? Grab the SPY Options Mastery guide free here.

FAQ

What is 0DTE strike selection?

0DTE strike selection is the decision of which strike price to buy when trading same-day expiration options. ATM is the default for fair pricing and tight spreads, ITM gives heavier delta with less theta bleed for high-conviction setups, and OTM is cheaper but decays fast and moves less.

Should I buy ITM or ATM on 0DTE?

I default to ATM because the spreads are tightest and the delta is honest. I go ITM only on A+ graded setups where the higher delta and lower relative theta decay justify the bigger premium.

Are OTM 0DTE options worth it?

Far OTM 0DTE is a lottery ticket: cheap for a reason, theta eats it alive, and it needs a miracle move to pay. I avoid it. One or two strikes OTM in small size on a fast mover is the furthest I'll go.

How much does the bid-ask spread matter on 0DTE?

Everything. On 0DTE the fill is part of your edge. I use limit orders at mid-price and skip strikes with wide spreads entirely, because overpaying on entry means you need a bigger move just to break even.

What ticker should I trade 0DTE on as a beginner?

$SPY, no debate. The liquidity is the deepest in the game, spreads are tight, and the option chain has every strike you could want. It's the only 0DTE ticker I recommend starting with.

Risk note: everything on this blog is educational content from my own trading experience, not financial advice. Trading options involves substantial risk of loss.