Probability of Profit vs. Probability of Touch
Probabilities come in many forms and today we'll discuss the differences between probability of profit and probability of touch. This becomes of the key pieces of research that suggest stop loss orders actually create more losing trades. Probability of profit is the likelihood that a stock will not trade down/up past your strike price and stay at that level until expiration, hence the chance that you win on your premium selling strategy. Probability of touch is the likelihood that the same stock trades down/up to your strike price at some point between now and expiration, but may not stay at that level.