Trade & Probability Calculator

The Trade & Probability Calculator shows a visual representation of the risk/reward of an options strategy to help you quickly assess option trade risk, based on the price of the underlying on certain dates, using the Black-Scholes option pricing model. It also plots the probability of the underlying symbol price at any point in time up to the expiration date.

The Trade & Probability Calculator tab is next to the Market Depth and Option Chains tabs in the All in One trade tool.

Learn more about the Trade & Probability Calculator in this training module.

Profit and Loss Prediction

Three lines overlay the graph: 

• Predicted Profit or Loss based on Today's date
• Predicted Profit or Loss based on halfway to the expiration date
• Predicted Profit or Loss based on expiration date

These dates, along with the expiration date that used for the underlying probability chart, may be changed by clicking the calendar icon in the fields above the chart.

TIP: The Profit value on the Y axis only relates to the P&L lines, not to the underlying probability chart.

Customize colors: Right-click on the color square for each graph element (shown below) to change the color of the element or to hide the element. You can also click the element name to toggle between viewing and hiding the element.

Probability Calculation

The solid curve plots the underlying symbol's price probability at the expiration date for the option strategy selected using a log normal distribution based on the expiration date (or another date of your choosing), current tr

ade price, and implied volatility %. Each point along the curve has an associated price (which you can see along the X axis) and probability of expiring at that price.

• The two vertical sliders at the top of the chart are the Lower and Upper Targets that can be adjusted from the default +1/-1 standard deviation (from the current market price) by dragging side to side. The blue Prob. Expiring bar at the top of the calculator shows the probability of the option expiring Below the lower slider, Between the sliders, and Above the upper slider.
• The price at the bottom in the center of the chart is the price of the underlying when the calculation was initiated. Update the underlying data by clicking Refresh below the chart.
• The Settings at the bottom of the tab (click the expansion arrows to view) includes the estimated 30 day at the money Implied Volatility, Dividend Yield, and Interest Rate percentage (Risk Free Interest Rate derived from $IRX). These values, along with the Upper and Lower Targets mentioned above, are adjustable allowing for multiple configurations or "what if" scenarios. You can also more precisely adjust the slider values by manually entering a number in the settings.

• View the probability for any price point by clicking on the graph. Crosshairs will display, pinpointing the price on the vertical crosshair and estimated profit or loss on the horizontal crosshair. The blue bar at the top of the tab will change to show the probability of the underlying price Probabiliy of Touching is the possibility of the stock touching the selected strike price between now and expiration.Touching or Probability of Expiring shows the probability of an underlying stock's price being above or below the chosen strike price at expiration.Expiring at that price point.

The Trade and Probability Calculator provides calculations that are hypothetical in nature and do not reflect the actual investment results or guarantee future results. The calculations do not consider commissions or other costs, and do not consider other positions in your account(s) for which a specific trading scenario is being examined. Rather, these values are based solely on the individual contract or pair of contracts in this specific trade.

In addition, the calculations incorporate annualized dividend yields and do not consider ex-dividend dates, early assignment, and other risks associated with option trading. If an option expires before the estimated date, it is treated as though it expires on the estimated date. Investment decisions should not be made based solely upon values generated by the Trade & Probability Calculator.