What is probability ITM?
In one line: Probability ITM is a model's estimate of the chance an option finishes in the money at expiry, which for a seller is roughly the chance of being assigned.
How it works
"In the money" (ITM) means the option has real value at expiry. A put is in the money when the stock is below its Strike price. A call is in the money when the stock is above it.
Probability ITM is the pricing model's guess at how likely that is. It comes from the same inputs as everything else on the Options chain: the stock price, days to expiry and Implied volatility.
Most platforms show it as a column. If yours doesn't, use Delta. A 0.30-delta put has roughly a 30% chance of finishing in the money. It's not exact, but it's close enough for picking a strike.
For a seller, probability ITM is the chance you get the shares (a short put) or lose the shares (a short call). That's why the wheel strategy leans on it so much.
An example (hypothetical)
An illustration, not a trade idea. Made-up stock XYZ trades at $50, 30 days to expiry. You're choosing a Put option to sell.
| Strike | Delta | Probability ITM (about) | Premium | If assigned and XYZ is at $40 |
|---|---|---|---|---|
| $48 | 0.40 | 40% | $1.60 | +$160 − $800 = −$640 |
| $45 | 0.25 | 25% | $0.90 | +$90 − $500 = −$410 |
| $42 | 0.15 | 15% | $0.45 | +$45 − $200 = −$155 |
Say you take the $45 strike. The model says 25%. One month in four, roughly, you own 100 shares at $45. If that month is the one where XYZ falls to $40, the premium covers less than a fifth of the drop.
The probability was fair. The loss was still real.
Why it matters for sellers
Probability ITM is the single best number for choosing where to sell. It turns "I think it won't get there" into a figure you can compare across strikes and stocks.
Three things to keep in mind:
- It's for expiry only. The chance of the stock touching the strike at some point before expiry is about twice as high. A put can be in the money for a week, then expire worthless.
- It moves. A drop in the stock or a rise in implied volatility pushes it up. The 25% you sold at can be 50% a week later.
- It ignores size. A 15% chance of a $1,500 loss is worse for your account than a 25% chance of a $400 loss.
A useful habit: pick the strike by probability ITM, then check the loss at a price 20% lower. If the second number scares you, the first one doesn't help.
Questions
Is probability ITM the same as delta?
Close, but not the same. Delta is how much the option moves per $1 move in the stock. It also works as a rough guide to the chance of finishing in the money. Platforms that show both columns usually show numbers a few points apart.
What probability ITM should I sell at?
Many sellers use 0.20 to 0.30 delta, so a 20% to 30% chance of assignment. That's a habit, not a rule. A lower number means less premium and a further strike. Choose the strike you'd be fine being assigned at.
Why did my probability ITM jump overnight?
The stock moved toward your strike, implied volatility rose, or both. Earnings and news do this. The number updates every day with the market.
The Options Wheel System · $99 · one payment
Learn the whole wheel, in order — then use it for life.
22 plain-English modules from complete beginner to running the wheel: covered calls, cash-secured puts, assignment, rolling, the math and the risk rules — with a scored quiz after every part and a daily deals board that applies the same rules to real markets.
See What’s Inside the Course One payment · Lifetime access · Education only, not adviceNot sure the wheel is for you?
Take the 2-minute trader test Try everything free first — the whole library costs nothing. · Try our free TradingView indicators (they work in the TradingView phone app)One chart idea a day, in plain English. Follow along: