Using the Probability


This feature allows you to see the Bell Curve in relation to your trade.  To open a probability graph, click the calculate button with your trade information in the option matrix, then click the Probability Graph button.

This is an example of the probability graph of an index credit spread.

This graph looks like a classic bell curve graph.  The chart itself has a scroll bar at the bottom (Like all of our Odds Online charts.) that allows you to get detailed information about probability at any price.  The probability value given is equal to the chance that the asset will be below the price listed in the price field.

While the graph above looks like a normal symmetrical bell curve, the graph below does not.  This is because of a log normal distribution.   i.e. the chances of the asset doubling in price are equal to the chances of the asset being cut in half.  When displaying the probability on a chart with the prices, it can make the chart look a little funny when there is a lot of time before the options expire  The less time before expiration the more normal the curve appears to be. 
 

 

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