Choosing the Strike

Last updated 6 June 2026 · by Theo Chen

The big idea: The strike is the price you commit to buy at, so choose it for the price you want — let delta confirm the odds, not make the decision.

With the why settled, the first real decision is the strike. The most common mistake is to open the option chain — your broker’s grid of every available strike and expiry date — sort it by premium, and sell whatever pays the most. For a Cash-Secured Put, the premium comes last, because the strike is the price you are committing to buy at.

Start with a stock you'd own

Before any strike, ask the question the whole strategy rests on: if I were assigned 100 shares today, would I be glad to own them? If the answer is no, stop — there is no premium high enough to rescue a stock you didn't want. So the first pass is a quick quality and liquidity gut-check:

  • Would I hold it if assigned? Understand the business or fund. For an ETF you are judging the basket, not one name.
  • Is it falling for a reason I can live with? A market-wide pullback is one thing; an accounting scandal or a collapsing thesis is another.
  • Are the options liquid? "Liquid" means the option is easy to trade in and out of. You want a tight gap between the bid (the price buyers are offering) and the ask (the price sellers want), plus healthy open interest — the number of contracts already outstanding. Both signal the option trades actively, so you get a fair price. A great idea on a thinly-traded option becomes a bad fill the moment you need to close it.

The premium trap

Selling on a stock you do not actually want because the premium is fat. The richest premiums sit on the riskiest names — binary-event biotech, heavily shorted meme stocks, anything with a catalyst you can't handicap. The market is paying you a lot precisely because the danger is real.

Pick a strike you'd actually pay

Choose the strike for the price, not the premium. It should be a level you'd be happy to own at — near a support level (a price the stock has repeatedly bounced off before), below a valuation you like, or simply lower than today. If the stock trades at $100 and you'd buy at $90, the $90 Put is the natural candidate — not the $98 Put just because it pays more.

Let delta confirm the odds

Delta is your second input, and it doubles as a rough probability gauge: a 0.30-delta Put has roughly a 30% chance of finishing in the money — that is, of being assigned — though it drifts with price, time, and volatility. Many Sellers live in the 0.20–0.30 delta band: enough premium to be worth it, with assignment the minority outcome. The options probability calculator turns that into real odds for a given strike.

Reading a Put option chain Strike Bid Ask Delta Open int. $98 2.30 2.45 0.42 1,100 $95 1.55 1.65 0.33 2,800 $92 1.20 1.30 0.27 3,400 $90 0.95 1.05 0.23 4,200 $85 0.45 0.55 0.14 1,500
A simplified Put chain for a stock at $100. The $90 strike (highlighted) sits near 0.23 delta — about a 23% chance of assignment, inside the 0.20–0.30 band. The gap between the bid ($0.95, what buyers pay) and the ask ($1.05, what sellers want) is the spread; 4,200 in open interest means plenty of contracts trade, so you’ll get a fair fill.

But let the chart and the price you'd pay lead; let delta confirm. Picking a strike purely because its delta "looks safe" is how you end up agreeing to buy a stock at a price you never actually liked. For the full method — support, valuation, and how delta fits — see How to Choose a Strike Price.

Key takeaways

  • Screen the underlying first — only sell on a stock or ETF you'd be glad to own.
  • Set the strike at a price you'd actually pay: near support, below fair value, or simply lower.
  • Use delta (often 0.20–0.30) to confirm the odds, not to make the decision.
  • A fat premium usually means real risk — ask why before you reach for it.

Pop quiz — solidify your understanding

Should you choose the strike for the price or the premium?

For the price. The strike is what you commit to buy at, so it should be a level you would genuinely be happy to own — the premium comes after.

What does a 0.30-delta Put roughly tell you?

Roughly a 30% chance of finishing in the money (being assigned) — an approximation that shifts with price, time, and volatility. Many Sellers work in the 0.20–0.30 band.

Why screen the underlying before looking at strikes?

Because a strike only matters on a stock you would own. The fattest premiums often sit on the riskiest names, where the premium is high because the danger is.

Frequently asked questions

What is the best delta for selling Puts?

There is no universal answer. Many Sellers use 0.20–0.30 for a balance of premium and a lower chance of assignment, but delta is only a rough probability. The better question is whether the strike is a price you would actually buy.

Should I use technical support to pick the strike?

It helps. A strike near real support or below a valuation you like gives you a price you would be comfortable owning. See the strike-price guide for the full method.

A higher strike pays more premium — why not take it?

A higher strike means a higher chance of assignment and less cushion. Premium rises with risk; the question is always whether you would happily own the stock at that strike.

Share:

Educational content only — not financial advice. Options are contracts with real obligations and the risk of loss. Understand assignment and size positions conservatively before you trade.