The Trade & Probability Calculator shows a visible representation of the choices chance/reward of an options method to help you fast check alternative trade threat, based totally on the choices charge of the underlying on positive dates, the usage of the Black-Scholes option pricing version. It also plots the opportunity of the underlying symbol fee at any point in time up to the choices expiration date.
The Trade & Probability Calculator tab is next to the choices Market Depth and Option Chains tabs inside the All in One alternate device.
Learn greater about the Trade & Probability Calculator in this training module.
Three traces overlay the choices graph:
These dates, along side the expiration date that used for the underlying opportunity chart, can be changed by way of clicking the choices calendar icon in the fields above the choices chart.
TIP: The Profit price on the Y axis simplest pertains to the choices P&L traces, not to the choices underlying possibility chart.
Customize colors: Right-click on on the choices color rectangular for every graph element (shown beneath) to trade the colour of the detail or to hide the element. You can also click on the element name to toggle among viewing and hiding the element.
The strong curve plots the underlying image’s charge possibility at the choices expiration date for the choice method selected the usage of a lognormal distribution primarily based on the expiration date (or every other date of your deciding on), current exchange charge, and implied volatility %. Each point along the curve has an associated charge (which you could see alongside the choices X axis) and opportunity of expiring at that price.
View the choices probability for any charge point with the aid of clicking on the graph. Crosshairs will show, pinpointing the choices rate on the vertical crosshair and predicted profit or loss on the choices horizontal crosshair. The blue bar at the top of the tab will alternate to expose the opportunity of the choices underlying rate Probabiliy of Touching is the choices possibility of the choices stock touching the selected strike fee among now and expiration.Touching or Probability of Expiring indicates the possibility of an underlying inventory’s charge being above or below the selected strike rate at expiration.Expiring at that fee point.
The Trade and Probability Calculator provides calculations which are hypothetical in nature and do now not replicate the actual investment effects or assure destiny effects. The calculations do not remember commissions or different costs, and do now not consider other positions to your account(s) for which a specific trading scenario is being examined. Rather, those values are primarily based entirely on the choices man or woman settlement or pair of contracts in this precise change.
In addition, the calculations contain annualized dividend yields and do not recollect ex-dividend dates, early challenge, and other risks associated with alternative trading. If an alternative expires earlier than the estimated date, it’s miles dealt with as though it expires on the choices envisioned date. Investment selections must not be made primarily based completely upon values generated by means of the choices Trade & Probability Calculator.