Importance of Delta in Covered-Call Writing
Importance of Delta in Covered-Call Writing
When writing covered calls, most traders focus on premium income. But one factor that deserves just as much attention is the delta of the option.
What Is Delta?
Delta is one of the “Greeks” — it measures how much an option's price is expected to change based on a $1 move in the stock. For covered calls, delta also helps estimate the probability that your option will finish in-the-money (i.e., be assigned).
- A delta of 0.50 means roughly a 50% chance of being assigned.
- A delta of 0.30 means roughly 30% chance of being assigned — more conservative.
- A delta of 0.70+ is aggressive and has high assignment risk.
Why Delta Matters in Strategy
By choosing options with the right delta, you can align your trade with your goal:
- Low delta (e.g., 0.25–0.35) for conservative trades aiming to keep the stock.
- Mid-delta (e.g., 0.45–0.55) for balanced trades with good premium.
- High delta (e.g., 0.65+) for aggressive trades aiming for assignment.
Delta & Premium
Generally, the higher the delta, the higher the premium. But this comes at the cost of a higher probability of assignment. Smart covered call writers use delta to balance income vs. risk.
How Optrader Helps
Optrader lets you filter and sort options by delta. You can combine this with ROO%, volume, and sentiment to build covered call trades that match your exact risk tolerance.
