At-the-money stock options picks has both advantages and disadvantages
over stock and in-the-money stock options picks. First, the
at-the-money stock options picks will be cheaper then both the
stock and the in-the-money stock options picks. So there is
less capital requirement and less total risk.
Remember, when buying stock options picks, you can only lose
what you spend. The problem is the amount of extrinsic in the
In order for you to profit from buying an at-the-money stock
options picks, you need the stock to make a move very quickly.
Because you have so much extrinsic value, you will be battling
against the options daily rate of decay.
So, the movement of the stock options picks
must happen quickly
enough and large enough to offset the amount of money you will
be losing daily as expiration draws near.
With this said, the best chance you have to make money when
buying a naked at-the-money option is to use it as a short term
trade. The longer you hold onto the stock options picks, the
harder it is for you to be profitable due to the options decaying