Probability of Touch (POT) in Options Trading: Puts and Calls
Probability of Touch (POT) in Options Trading: Puts and Calls
By:Kai Zeng
Our analysis of several puts reveals the actual POT amounted to only half the theoretical POT
- Puts have a lower actual probability of touch(POT) compared to calls.
- The actual POT on the put side is roughly half of the theoretical POT, whereas the actual POT on the call side aligns with the theoretical number.
- The win rate after positions are tested is higher on the put side than on the call side.
Probability of touch (POT), a key concept for premium sellers, indicates the likelihood an option will reach its strike price before expiration, helping investors choose appropriate strikes.
This measure is particularly useful for premium sellers who focus on price movements. Typically, the POT has about twice the probability of the option finishing in-the-money. For instance, if there's a 20% chance of an option ending in-the-money, the POT should be roughly 40%.
We know the Probability of profit (POP) often overstates the realized success rate. This raises the question: Is the theoretical POT similarly overestimated?
To explore this, we analyzed 45 days to expiration (DTE) 10 Delta (𝜟) Puts and 10𝜟 Calls from several popular underlyings: SPDR S&P 500 ETF Trust (SPY), Invesco QQQ Trust, Series 1 (QQQ), Apple (AAPL), Amazon (AMZN) and Microsoft (MSFT). All positions were held until expiration, and the theoretical POT for these 10𝜟 options should be around 20%.
Our analysis revealed the actual POT for these puts is significantly lower than expected, amounting to only half of the theoretical POT.
Conversely, the actual POT on the call side with the same delta was much higher—about double what we observed on the put side. This discrepancy is largely because of the strong bull market in recent years, which has made calls more likely to be breached than puts. However, the average actual POT on the call side remains consistent with the theoretical number.
.jpg?format=pjpg&auto=webp&quality=50&width=1000&disable=upscale)
We also examined the win rate of these positions after the strikes were touched. On the put side, the variation in win rates is slightly higher than on the call side. Interestingly, win rates on the put side are significantly higher—by 21%—compared to the call side. This is attributed to the strong market and quick rebounds from market bottoms, which favor put options.
.jpg?format=pjpg&auto=webp&quality=50&width=1000&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.