Most traders start with delta.
They open the options chain, scan for a 0.30 delta, see the premium, and sell the contract. The chart is an afterthought. That is backwards.
Delta does not define risk. Structure does. I do not start with the options chain. I start with the chart.
My process is simple: find where I would be comfortable owning the stock, then place the strike around that level. The option is just the wrapper. The decision is made on the chart.
Step One: Find the Floor
Before I think about delta, I identify the level where buyers have consistently stepped in.
This is not a guess. It is a multi-touch support zone, a level that has been tested and defended multiple times.
If I am not comfortable owning the stock at that level, there is no trade. The strike is not a number pulled from the chain. It is anchored to structure.
I do not pick strikes. I place them.
Step Two: Define Acceptable Ownership
Selling a put means agreeing to buy the stock.
So the real question is not, “What premium can I collect?” It is, “At what price would I be fine owning this business?”
If the answer is unclear, the trade is wrong. Once that level is clear, the strike becomes obvious.
If assigned, I want to own a position that makes sense structurally, not something I need to defend emotionally.
Step Three: Use Delta as a Filter, Not a Driver
Only after the structure is defined do I look at delta.
Delta is useful. It helps standardize probability and premium across trades. But it is not the decision-maker.
A 0.30 delta sitting above weak structure is worse than a 0.20 delta sitting below strong support.
Delta refines the trade. It does not define it. Delta does not tell you where risk is. Structure does.
Step Four: Adjust for Market Conditions
Not every environment allows aggressive strike placement.
In strong markets, I can sell closer to support and accept tighter margins. In weak or unstable markets, I push further out of the money. I want more distance between my strike and current price.
The structure stays the same. The buffer changes.
If the market is unstable, I get paid less or I do not trade.
Common Mistake: Letting Premium Choose the Strike
This is where most trades go wrong.
A trader sees a higher premium slightly closer to the current price and shifts the strike up to capture more credit. Now the trade is no longer anchored to structure. It is anchored to yield.
That is how a controlled position turns into a forced assignment at a bad level.
Premium should confirm the trade, not create it. If moving the strike improves the premium but worsens the structure, it is not an upgrade. It is a different trade.
The Practical Rule
Before placing any trade, I ask one question:
If assigned at this strike, would I open this position today on the chart alone?
If the answer is no, the strike is wrong. Not the timing. Not the premium. The strike.
The Bottom Line
The strike defines the trade.
Delta is a tool. Premium is a byproduct. Structure is the foundation. If the structure is right, the rest follows.
If the structure is wrong, no combination of delta and premium will fix it.
I do not trade probabilities. I trade defined levels.