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Picking strikes by delta or by price: odds vs the price you'd accept

Picking by delta means choosing a strike by its rough odds of ending in the money, like "the 20-delta put." Picking by price means choosing the level you'd actually be glad to buy or sell at. Delta tells you how likely assignment is. Price tells you whether you'd be okay with it.

Comparison · 6-minute read · Updated 2026-10-27

The short answer

Delta is a number on the options chain. For a seller, it's often read as a rough guess of the chance the option ends in the money. A 0.20 delta put is roughly a 1-in-5 chance, by the market's own pricing. It's an estimate, not a promise.

Picking by price means starting with a level you chose yourself: a price you'd be glad to pay for the shares, or glad to sell them at. Then you sell the strike at that level, whatever its delta.

Delta answers "how likely?" Price answers "would I be okay?" Most experienced sellers check both.

Side by side

How delta picks a strike

On most chains, delta is shown next to each strike. A seller with a rule like "sell the 0.20 delta put" scans down the chain and picks the strike closest to 0.20.

The nice part is that it adjusts on its own. On a calm stock, the 0.20 delta strike is close to the price. On a jumpy stock, it's further away. The odds stay roughly the same.

The weak part is that delta knows nothing about the company. It's built from the price, time and Implied volatility. It doesn't know if $45 is a level you'd be happy to own. See our Greeks guide.

How price picks a strike

A price-first seller starts with homework: what is the company worth to me, where is the last place the price turned around, what would I pay if I were buying shares today?

Then they look for a strike at or below that price. If the premium there is tiny, they may wait, or skip the trade.

The nice part: if assigned, they own the shares at a price they chose on purpose. The weak part: they may sell strikes with very high odds of assignment, or premiums too small to be worth the cash.

A worked example (an illustration, not a trade idea)

A made-up stock, XYZ, trades at $50. You've decided you'd be glad to own it at $42, the last place the price turned around. The 30-day chain shows:

A delta seller with a "0.20" rule sells the $45 put. A price seller sells the $42 put. A seller using both might also consider $45, but only if they'd be fine owning at $45.

The lower strike pays less in a quiet month. It also loses less in a drop, and leaves you owning at the price you picked.

The higher-delta strike pays four times as much as the $42 put. In a drop to $40, it loses more than three times as much.

Using both together

A simple way many sellers combine the two:

1. Start with price. Decide the highest price you'd be glad to pay. That's your ceiling for the strike.
2. Check the delta. If the strike at your price has a very high delta, you're very likely to be assigned. Make sure you want that.
3. Check the premium. If it's too small to be worth tying up the cash, skip the trade or wait for a better day.
4. Check the market for that strike. Busy strikes fill better. See volume vs open interest.

This keeps the odds in view without letting them pick a stock price you'd regret.

For the wheel strategy, price-first matters more on puts, where assignment means owning shares, and on calls, where the strike must sit above your cost.

In Canada, the same chain numbers apply in a TFSA or RRSP. Covered calls are widely allowed; cash-secured puts depend on the broker.

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