Choosing a Strike for Your Cash-Secured Put

In short

How strike distance trades off premium against assignment odds on a cash-secured put, with a three-strike worked comparison and a note on using delta as a rough gauge.

Every strike you pick for a cash-secured put trades two things against each other: how much premium you collect, and how likely you are to actually get assigned. Here's that trade-off, worked out across three strikes.

The trade-off

A strike closer to today's price pays more premium but is more likely to be reached. A strike further away pays less but is less likely to be tested.

A worked comparison

XYZ trades at $60. Here are three 30-day put strikes:

Strike	Distance from price	Premium	Effective cost basis if assigned
$58	$2 below	$2.10	$55.90
$55	$5 below	$1.10	$53.90
$50	$10 below	$0.40	$49.60

The $58 strike pays the most but sits closest to today's price, so it's most likely of the three to end up in the money. The $50 strike pays very little, but only gets tested if XYZ drops a full 17% first.

Using delta as a rough gauge

An option's delta (covered in the Options Basics course) is often used as an informal estimate of assignment odds. A put with a delta near -0.30 is sometimes read as "roughly a 30% chance of finishing in the money" — not precise, but a useful shorthand for comparing strikes on an options chain.

There's no one "correct" strike

A strike closer to the price prioritizes premium income and treats assignment as a fine outcome. A strike further away prioritizes avoiding assignment, in exchange for less premium. Both are legitimate ways to run the same trade — they just reflect different goals.

Trade with discipline

Chasing the biggest premium without genuine willingness to own the stock at that strike turns "get paid to potentially buy a stock you like" into "get paid to take on a purchase you didn't want." Whichever strike you choose, know it, know your expiration, and know your maximum risk before you sell — the obligation is the same regardless: if the stock falls below your strike, you buy at that price, even if the market has moved well below it by expiration.

Key takeaway: Strike selection on a cash-secured put is a trade-off between premium and assignment odds — not a search for one "best" number.

Next, this course adds a new module on sizing these trades with the VIX and screening entries with Bollinger Bands, before moving into what happens once you're assigned.

This lesson is educational content explaining standard options mechanics, not personalized investment or trading advice.