How We Pick Strikes: Delta, Expected Moves, and Staying Outside the Lines

Delta in plain English

Every day our screens publish trade ideas, and every idea lists a delta. If you have ever wondered what that number actually means, here is the plain-English version.

Delta is the market's rough odds. A 20-delta put means the market is pricing roughly a 20% chance that the option expires in the money — that the stock ends up below your strike. A 10-delta put means roughly 10%. It is a shorthand, not a prophecy: the market is often wrong, sometimes spectacularly. But as a way of describing how far out on a limb a strike sits, nothing else comes close.

Think of it like a weather forecast. A 20% chance of rain does not mean it will not rain. It means that on days like this, it rains about one time in five. We pick strikes the way you would plan a picnic: we want the odds comfortably in our favor, and we know an umbrella day still happens.

The expected move: the market's own forecast

Buried in every option chain is a number most investors never look at: the expected move. It is the market's own forecast of how far the stock might travel before expiration, up or down, derived from what options are actually trading for.

Here is the part that matters for how we pick strikes: we sell outside the expected move. If the market expects a stock to move five dollars either way over the next month, we want our short strikes sitting beyond that five-dollar line. The expected move is the crowd's best guess at the range; our strikes live outside the crowd's range.

The band we like: roughly 8 to 20 delta

This band is public — it is printed on our site next to the daily screens, and we are not shy about it. For the premium-selling ideas we publish, we look for strikes roughly between 8 and 20 delta.

Why that band? Below 8 delta, the premium thins out to almost nothing — you are tying up capital for pocket change. Above 20 delta, you are getting paid more, but the odds have moved against you faster than the premium has moved for you. The 8-to-20 band is the compromise we keep coming back to: far enough out to usually win, close enough to actually get paid.

It is not a magic formula. It is a starting point, applied with judgment, and every idea on our screens shows its delta so you can see exactly where each strike sits.

Why we don't chase fat premiums at the money

At-the-money options pay the fattest premiums. That is not a secret and it is not an accident — the premium is rich because the risk is real. An at-the-money put has roughly a coin flip's chance of expiring in the money. Selling it is not collecting rent; it is taking a bet with a slight edge and a large downside.

There is an old saying about picking up pennies in front of a steamroller. Selling at-the-money premium for income is the inverted version of the same mistake: the pennies look like dollars until the steamroller arrives, and then you discover the premium was never compensation for the risk — it was a down payment on it.

We would rather collect smaller premiums on strikes that usually expire worthless than large premiums on strikes that keep us up at night. Boring wins, compounded, beat exciting wins that occasionally detonate.

The expected-move gate: a screen with no ideas is a screen with standards

Here is our hardest rule, and the one we are proudest of: if no listed strike sits outside the expected move, we pass.

Some days the options market is pricing enormous moves — earnings week, a binary event, genuine uncertainty — and every strike with meaningful premium sits inside the expected move. On those days, a less disciplined screen would still publish something. Ours publishes nothing for that name, and says why.

A screen with no ideas is a screen with standards. We would rather show you an empty slot than a forced trade. The market will still be there tomorrow, and so will we.

What we don't publish

You will notice we talk about delta bands and expected moves — the concepts — and never about scoring formulas. That is deliberate. The ideas are free and fully specified: the stock, the strike, the expiry, the premium, the delta. The machinery that ranks and filters them stays ours.

What you see on the screens each morning is the output of that machinery, in plain words, with every number you need to evaluate the trade yourself. That is the deal we offer: our process, transparent; our formulas, private; every fill tracked publicly, winners and losers both.

Volatility moves the lines

The expected move is not a fixed number — it breathes with volatility. When fear is high, options get expensive, the expected move widens, and our strikes move further out to stay outside it. When markets are calm, the expected move shrinks and strikes can sit closer while keeping the same rough odds.

This is why we like selling premium when volatility is elevated and get pickier when it is dead: the same 15-delta strike pays you more when the market is nervous. You do not need a formula for this — just the habit of checking whether you are being paid enough for the odds you are giving. Some days the answer is yes. Some days the screen stays empty, and that is the standard doing its job.

What delta doesn't tell you

Delta is a useful shorthand, but it is not the whole story, and we would be lying if we pretended otherwise:

• It is a snapshot, not a promise. Delta moves as the stock moves. A 15-delta put can become a 40-delta put on a bad week. The odds were right at entry; the world changed after.
• It says nothing about liquidity. A strike with the perfect delta and no volume is a trap — wide bid-ask spreads eat the premium you thought you were collecting. We only publish ideas on names with real trading volume, which is why our universe starts at excellent companies with millions of dollars in daily volume.
• It does not warn you about events. Earnings, FDA decisions, elections — known events can blow through any delta. That is a large part of why the expected-move gate exists: when the market is pricing a big move, we step aside rather than argue with it.

None of this makes delta useless. It makes it one instrument on the dashboard — the speedometer, not the whole car. We drive with all of them.

The short version

Delta tells us the market's rough odds. The expected move tells us the market's forecast. We sell outside both, in the 8-to-20 delta band where the pay is real and the odds are ours, and we pass whenever no strike clears the bar. No chasing, no forcing, no formulas on display — just lines drawn in plain sight, and the discipline to stay outside them.