The .20 Delta — Conservative Income

The .20 delta is my safety gear. Selling a put at this level means you're picking a strike with roughly an 80% chance of expiring worthless -- you keep the premium 4 out of 5 times. You won't collect as much per trade, but the win rate is addictive, and that cushion before assignment kicks in lets you sleep at night.

Real-World Example

Say AAPL is at $185. The 30-DTE put chain shows the $175 strike at -.20 delta, paying $1.45. That's 5.4% below the current price. You collect $145 per contract, and AAPL has to drop more than $10 before you're in trouble. Your breakeven is $173.55. That's the kind of cushion I like on my bigger positions.

Win rate: ~80% of trades expire worthless (you keep full premium)
Typical premium: 0.5%-1.0% of the strike price per month
Annualized yield: 6%-12% on committed capital (before compounding)
Distance from current price: usually 5%-10% OTM depending on IV

When to Use the .20 Delta

I go to the .20 delta when VIX is above 20, because elevated IV means you still collect solid premium even at a conservative distance. It's also where I park my biggest positions -- stocks like AAPL or MSFT that I'd happily own but want to buy at a real discount. And when the market feels shaky but I still want to stay active? .20 delta all day.

The Tradeoff

At .20 delta, your monthly premium might only be $0.50-$1.50 per share. On a $10,000 capital commitment, that can feel like pocket change. I get it -- I've been tempted to bump up the delta plenty of times. But the math works over dozens of trades. Impatient traders drift to higher deltas and then wonder why they're getting assigned every other week. Stick to the plan.

Approximate Monthly Yield (.20 Delta)

Monthly Yield = Premium / Strike Price ≈ 0.5% to 1.0%

Think of .20 delta as your defensive posture. I typically allocate 40%-60% of my CSP capital to this level and save the higher deltas for smaller, more opportunistic plays. The .20 delta positions are the ones that keep your account growing steadily even when things get choppy.

The short version

•.20 delta = ~80% chance you keep the full premium. Those are great odds.
•This is my go-to for big positions, high-VIX environments, and markets that feel uncertain
•Expect 0.5%-1.0% monthly on committed capital -- not exciting, but it compounds fast
•Your core, bread-and-butter income trades should live at this delta

Quick Check

1/2

You sell a .20 delta put on MSFT with 30 DTE. Roughly how often will this trade expire worthless?

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