Selling put options in bullish markets and call options in bearish ones with out-of-the-money strikes 10–15% above the current price is ideal. Trading options with 2–6 months to expiration is safer, and selling during high volatility maximizes premiums. Avoid Friday sales due to weekend fluctuations, and trading with long-term market trends improves success.
If you know how to pick the right strike price and time, selling options can be one of the most reliable ways to make money. The option seller has a better chance of winning, but success depends on making smart choices instead of random trades. Let’s talk about how to find the best strike price for selling options, the best time to do it, and how to make a plan that will help you make steady, low-stress money.
How to Choose Strike Price for Option Selling
Your strike price determines your risk, reward, and peace of mind when you sell options. Choosing it at random is like selling insurance to every driver, even the ones who drive too fast. Smart sellers are like insurance companies in that they carefully choose their “clients.”
| Option Selling Factor | Strike Price Selection Strategy |
|---|---|
| Market Trend Analysis | Assess market direction before choosing a strike price. Bullish markets favor selling put options; bearish markets favor selling call options to reduce downside risk. |
| Bullish Market Approach | Sell deep out-of-the-money (OTM) put options 10–15% below the current price. |
| Bearish Market Approach | If the market is weak or going down, you should sell out-of-the-money call options above levels of resistance. |
| Distance from Spot Price | Choose far out-of-the-money strikes to set up a safety buffer that lowers the chance that options will be exercised. |
| Example | If Nifty trades at 23,000, selling a 23,800 call or 22,200 put offers a balance between safety and premium income. |
| Volatility Consideration | Higher volatility makes premiums go up, which makes selling options more appealing, but it's important to watch your position size and risk. |
| Risk-Reward Balance | Avoid chasing high premiums near the money; instead, prioritize consistent returns with controlled downside risk. |
| Capital Protection | Pick strikes that will help you stay calm when the market goes up and down. |
| Avoid Aggressive Trend Bets | You should sell options cautiously and only with limited capital during extreme market panic. |
| Probability-Based Thinking | Identify price levels that the market is unlikely to reach instead of attempting to predict precise price movements. |
Step-by-step, here’s how to do it:
1. Learn the basics of the market first
You need to know which way the market is likely to go before you pick a strike price.
- If the fundamentals are bullish, sell put options, which means you think the price will stay above the strike.
- If the fundamentals are bearish, sell call options (you think the price will stay below the strike).
Example:
You could sell deep out-of-the-money puts on crude oil if the fundamentals show that demand will rise in the long term. For example, you could sell puts with a strike price 10–15% below the current price. This way, even if prices go down a little, your options will still be worthless, and you will keep the premium.
2. Sell options that are very far out of the money
A strike price that is far out-of-the-money (OTM) is often the best one for selling options. Why? This is because you allow yourself ample opportunity to make mistakes. Even if the market goes against you in the short term, it has to move a lot before your position is in danger.
- For calls: Pick a strike that is 10–15% higher than the current price.
- For puts: Pick a strike that is 10–15% lower than the current price.
As long as the market doesn’t make a big move against your trade, this strategy lets you make money.
For example, the strike price for selling options is
If Nifty is trading at 23,000, a cautious trader might sell the 23,800 call option or the 22,200 put option, both of which will expire in 30 to 60 days.
These prices are far enough away from the current price to be safe but close enough to make a substantial profit.
3. Pick options that will expire in 2–6 months
Selling options with time value is one of the smartest things you can do as a professional option seller.
Instead of rushing to buy options that are about to expire, which lose value quickly but are very risky, sell options that don’t expire for two to six months.
Why?
- They keep you away from the market (safer strikes).
- They have a steady time decay (theta) over the course of weeks.
- You don’t have to keep an eye on them all the time.
This is excellent if you want to treat options like an investment instead of trying to make money every day.
4. Take advantage of volatility
Volatility also affects the best strike price for options.
When volatility goes up, premiums go up too. That’s when you should sell!
Higher volatility = Higher premium = More income potential.
But keep in mind that higher volatility also means bigger short-term changes. So always:
- In markets that change quickly, sell smaller amounts.
- If you need to, keep stop-losses or hedges in place.
5. Only sell against the trend when the market is too hot
When traders are scared, option prices can look “ridiculous.” For example, far out-of-the-money (OTM) calls can be overpriced during a significant market rally. You can profit from selling these overpriced calls when the market is stable, but be careful about how much risk you take.
Use this method only sometimes and with small amounts of money.
When Is the Best Time to Sell an Option?
Timing is important, but not as much as choosing the right strike.
Here’s how to set the time for your trades:
1. Sell options when the market is very volatile
When the market is nervous, option premiums go up. That’s your time. You earn more money and have more chances to mess up.
Example:
If VIX goes up from 12 to 18, the same option premium can go up by 40% to 60%. At that point, selling gives you a better chance of making money when the market calms down.
2. Sell options when the market is stable or moving sideways
If the market is moving quickly, it could easily hit your strike price. Instead, look for times when the market isn’t moving much in any direction, when time decay (theta) works in your favor.
Weekly observation:
- Mondays and Tuesdays often have better premiums, and time decay starts in the middle of the week.
- If weekend news can cause sudden gaps, stay away from Fridays.
3. Get in line with the long-term fundamentals of the market
If the overall trend is up, sell puts; if it’s down, sell calls. Your job is not to guess where the price will go, but where it won’t.
You’re betting on chance, and with the right information and timing, luck is on your side.
The Black Monday Lesson Every Option Seller Must Learn
It was a surprise how quickly the stock market crashed on Black Monday in 1987. Most traders who got scared and tried to guess bottoms and tops lost money. Some professional traders made it through the chaos by doing something different. They sold the options with strike prices so high that even the worst panic couldn’t reach them. They sold overpriced options and carefully sized positions, patiently waiting for volatility to skyrocket. While other people fought their feelings, time decay and probability helped them.
That crash changed the way professionals trade options for good. The lesson is that you need to plan ahead to be successful, not be brave. Expert option sellers continue to prioritize capital protection, timing high volatility, and strike price distance. Some rules that don’t change over time are to sell options when fear is high, pick strikes with a safety margin, and let time, not emotion, determine results.
To earn upfront premiums, writers sell call or put options. Sellers anticipate that the options will expire worthless. Read more…
Final Thoughts
When you sell options, it’s like running your own insurance company in the market. You always get premiums, but only if you choose the risks you want to insure carefully.
Choosing the right strike price for selling options gives you a better chance of winning. If you add in the best timing—high volatility, stable markets, and the right fundamentals—you have a plan that can give you steady, low-stress monthly income.
So the next time you ask, “What is the best strike price for selling options?” Remember:
Pick far OTM strikes-
- Make sure they fit with the basics of the market.
- Sell when there are 2–6 months left until expiration.
- Use spikes in volatility to get in.
Once you know these steps, you’ll be able to sell options like an investment instead of a bet.
FAQ
When to sell CE and PE?
The key to selling options is timing. Here's a breakdown for pros:
- When to sell CE:
The charts show that the market is not moving.
RSI or MACD shows that the market is overbought.
There will probably be consolidation or a small drop.
- When to sell PE:
The price is close to a support level.
RSI or MACD shows signs of a recovery after being oversold.
You want things to stay the same or go up a little.
When implied volatility (IV) is high, it's best to sell options because you'll get higher premiums for the same strike. As the expiration date gets closer, the theta (time decay) speeds up, which helps your positions close profitably even if the market doesn't move much.
How to succeed in option selling?
You can't just be lucky to sell options; you have to be disciplined, pick the right time, and choose the right strike.
This guide lists some important tips for selling options successfully: Choose OTM options with a Delta of 0.10 to 0.30 for the best balance, trade in the direction of market trends to avoid losing money, sell when volatility is high to make the most money, use stop-loss and hedging strategies to protect your capital, and don't trade too much to make more money. The key to making money from selling options is not always being right but being able to manage risk well.
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