Options Trading: How Early Management Affects Touch Probability
Options Trading: How Early Management Affects Touch Probability
By:Kai Zeng
Research shows shows early exits can cut strike touches by 50% for both puts and calls
- Managing options before they expire can greatly reduce the chance of hitting the strike price.
- On average, puts touch their strikes much less often if managed early compared to holding them until expiration. Calls touch their strikes even less when managed early.
- The difference in touching the strike between puts and calls becomes smaller when managing them 21 days before expiration, which helps in a market that doesn't move in one direction.
In our most recent analysis, we tested five stocks to see how often 10-delta puts and calls actually touch their strike prices. We found puts touched their strikes about half as often as expected, while calls touched their strikes as often as predicted.
n.jpg?format=pjpg&auto=webp&quality=50&width=1280&disable=upscale)
Today, we're exploring what happens when we manage options 21 days before they expire.
This time, we used 45-day options with a 20-delta and included other major indices like QQQ and IWM in our tests. A 20-delta option is expected to touch its strike 40% of the time.
When holding options until they expire, puts touched their strikes about half as often as expected, which matches our previous results. If we managed them 21 days before expiration, they touched their strikes even less, about 25% of the expected rate.
n.jpg?format=pjpg&auto=webp&quality=50&width=1280&disable=upscale)
For calls, while they touched their strikes as often as predicted, and managing them early reduced this to about one-third of the expected rate.
n.jpg?format=pjpg&auto=webp&quality=50&width=1000&disable=upscale)
This strategy of exiting positions early is particularly appealing for traders who sell options for premium and don't have a strong opinion on market direction. That’s because the chance of touching the strike price becomes similar for both puts and calls, even in a strong bull market.
n.jpg?format=pjpg&auto=webp&quality=50&width=1000&disable=upscale)
When we combined puts and calls into a strategy called strangles, managing them early reduced the chance of touching the strike by more than half compared to holding them until expiration.
n.jpg?format=pjpg&auto=webp&quality=50&width=1280&disable=upscale)
Kai Zeng, director of the research team and head of Chinese content at tastylive, has 20 years of experience in markets and derivatives trading. He cohosts several live shows, including From Theory to Practice and Building Blocks. @kai_zeng1
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2025 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.