30 delta vs 16 delta: more premium, or better odds?
A 30-delta option collects more premium and gets assigned more often. A 16-delta option collects less and is assigned less. Here is a full year of each, with the bad month included.
The short answer
Delta is a rough guide to the odds an option ends in the money. A 30-delta put has about a 30-in-100 chance of ending in the money. A 16-delta put, about 16-in-100.
The 30-delta strike sits closer to the stock price, so it pays more, often close to double. The 16-delta strike sits further away, pays less, and gets assigned less often.
Neither is "right". The 30-delta seller is paid more to take more assignments. The 16-delta seller gives up premium for more room. The worked year below shows how that trade plays out.
Side by side
| 30 delta | 16 delta | |
|---|---|---|
| Rough chance of ending in the money | About 30 in 100 | About 16 in 100 |
| Distance from the stock price | Closer | Further |
| Premium | Bigger | Smaller, often about half |
| Cushion before a loss | Smaller | Bigger |
| Assignments over a year | More | Fewer |
| Loss when the stock gaps through | Starts sooner | Starts later |
| Fits | Sellers who want the shares anyway | Sellers who mostly want to not be assigned |
A worked year (an illustration, not a trade idea)
A made-up stock, XYZ, trades near $50 all year. Each month you sell one 30-day put.
- 30 delta: the $47 strike for $1.00. Cash set aside: $4,700.
- 16 delta: the $45 strike for $0.50. Cash set aside: $4,500.
Eleven months the stock drifts and both puts expire. In month 8, XYZ gaps down on bad news and closes the month at $38.
| Month | XYZ at expiry | 30-delta ($47 put, $1.00) | 16-delta ($45 put, $0.50) |
|---|---|---|---|
| 1–7 | $49 to $53 | +$100 each, +$700 total | +$50 each, +$350 total |
| 8 | $38 | Assigned at $47, worth $38: −$900 + $100 = −$800 | Assigned at $45, worth $38: −$700 + $50 = −$650 |
| 9–12 | $50 to $52 | +$400 if you were back to selling puts | +$200 |
| Year | +$1,100 − $800 = +$300 | +$550 − $650 = −$100 |
Read that twice, because it cuts both ways.
The 30-delta seller collected $1,100 in premium and gave $800 back in one month. The 16-delta seller collected half the premium and still lost $650 that month, because a gap to $38 blows through $45 just as easily as $47.
Now change one number. Make the bad month land at $44 instead of $38. The 30-delta put loses $300 − $100 = −$200. The 16-delta put expires and keeps its $50. In that version the 30-delta year ends at about +$900 and the 16-delta year at about +$600. A small bad month favours the higher delta; a big one hurts both.
The honest frame: a lower delta buys room for small drops, not for big ones. The gap that hurts you goes through both strikes. What decides the year is how big the bad month is, and that is the one thing delta does not tell you.
What the year leaves out
The table counts the month 8 loss as if you sold the shares at $38. On the wheel you would hold them and sell a Covered call. That can shrink the loss over time, or it can grow it if XYZ keeps falling. See the wheel strategy for the full loop and closing early vs rolling for what a seller can do mid-trade.
It also leaves out the months you would have skipped. An earnings date inside the 30 days, a stock in free fall, a premium that looked too good: those are reasons to sit out, at any delta.
Why 30 delta tempts people
The premium looks like twice the pay for a small change in odds. And in a calm year it is. The number that does not show up on the Options chain is the size of the month that is not calm.
If you sell 30 delta, you are choosing to own the stock more often. That is fine if you picked a stock you want. It is a trap if you picked it for the premium.
Why 16 delta tempts people
Fewer assignments, more sleep, and the word "one standard deviation" attached to it. The cost is half the premium every calm month, and a loss that is only a little smaller in the bad one. Some sellers who go to 16 delta to "stay out of trouble" end up selling two contracts to make up the premium. That doubles the loss in month 8.
What to actually do
- Pick the stock first, not the delta. Would you hold 100 shares through a drop to $38?
- Write both strikes, both premiums and both losses at a gap down, before you sell.
- Size by the cash set aside, never by the premium. One contract at 30 delta is not "the same risk" as two at 16.
- Keep the month 8 row in your journal. The year is judged on it. Our options greeks guide explains what delta does and does not measure.
Questions
What does 30 delta mean for a put seller?
A 30-delta put has roughly a 30 in 100 chance of ending in the money, so about 3 months in 10 you can expect to be assigned. It also moves about 30 cents for each $1 move in the stock.
Is 16 delta the same as one standard deviation?
Close to it. A 16-delta strike sits near the edge of the one-standard-deviation expected move the option market is pricing. That is an estimate, not a limit; price goes past it.
Does lower delta mean lower risk?
Lower delta means fewer assignments, not a smaller worst case. A big gap through the strike loses almost as much at 16 delta as at 30, and you were paid half as much for it.
Should beginners sell 30 or 16 delta?
Start with a strike you would be happy to buy the stock at, then look at its delta. If the stock is one you want, somewhere around 20 to 30 is common. If you mostly want to avoid shares, question why you are selling puts on it at all.
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