Pricing & Volatility
Without a doubt we get our "edge" as options traders by mastering options pricing and volatility. Specifically the fact that long-term implied volatility always overstates the expected market move.
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Probability of Profit vs. Probability of Touch

The difference between probability of profit and probability of touch is important because it explains why stop loss orders may actually create more losing trades.
Probability of Profit vs. Probability of Touch
Kirk Du Plessis
Apr 19, 2021

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.

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Option Probability Curve
The option probability curve is an indicator that helps you visually project the price range for a security with a given confidence interval.

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