The same trade idea expressed at three different strikes is three different bets. Most retail traders default to the cheapest contract, which is almost always the wrong choice.

ATM strikes - the balanced bet

An at-the-money option has roughly 50% delta and the highest gamma. You participate in moves cleanly, you pay the most theta. Use ATM when your conviction in direction is moderate but you want defined risk and decent move participation.

OTM strikes - the high-conviction bet

Cheap on a dollar basis. Far lower probability of success. You need a sharp move in your direction inside the window. OTM is appropriate when you expect a specific catalyst inside the expiry - earnings, FDA, court ruling - and you want maximum convexity per dollar.

ITM strikes - the stock replacement

Higher delta (0.70+) and lower theta as a percentage. ITM behaves like leveraged stock. Use it when you want directional exposure but with capped risk and willing to pay for the privilege.

The honest matrix

High conviction, sharp move expected soon → OTM, short-dated.
High conviction, slow grind expected → ITM, longer-dated.
Moderate conviction, want defined risk → ATM debit spread.
Pure exposure proxy → ITM LEAPS at 70-delta.

The trap nobody warns you about

Lottery-ticket OTM options have a winrate around 10-20% even when your directional call is right. The expected value math can still work, but only if you size as if every trade is a write-off and let the winners pay for the population. If you cannot stomach that distribution, do not buy OTM.