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Using Delta for Probabilities

Delta can be used to estimate the probability a stock will be in-the-money at expiration. This video demonstrates how to use delta when setting up option strategies.
Using Delta for Probabilities
Kirk Du Plessis
Apr 19, 2021

I'm often told, "Kirk I can't find the option probability factors." So I'm going to show you how you can use Delta as a substitute for the ITM probability alternative. This is a great way to compare apples to apples when you are using a different broker platform. Delta will not always be as accurate as having the true statistical probabilities, but it is close enough that you can make very smart decisions about which strike price to select when creating and customizing different option strategies.

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Buy to Open vs Sell to Open
Buy-to-open (BTO) orders open a new position and require paying a debit. Sell-to-open (STO) orders open a new position and receive credit. The premium paid or collected is applicable to single and multi-leg strategies.

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