My intuition is that residuals have a higher chance of a low payout, whereas options have a lower chance of being worth anything, but probably a higher value if they do pay off.

Residuals for a company which is bankrupt would be zero - same as their stock price.

Also, they could just rewrite the sections of code that are expensive and nuke their costs and your residuals at any point. Unlike a brand or whatever, it’s trivial to redo as it’s not user facing.

No because with options you may have to wait for your liquidity event forever.

If you think any sane founder is going to pay out on ‘residuals’ of any significant amount without a similar liquidity event, I’ve got a bridge to sell you.

I’d agree, especially if they’re relying on VC funding to power through growth.