Probability of Profit

What is Probability of Profit?

The likelihood of a stock reaching a particular price level, as derived from options delta (Δ). Used as a proxy for the probability of an option expiring in-the-money, the delta of options with strikes at or close to the user price input is one way to gauge how likely the market views such a move (or how unlikely when selling options or credit spreads).

On the Options AI platform, Probability of Profit is calculated using the interpolated options delta at the trade Breakeven level. It can be viewed as the likelihood (as priced by the options market) of a stock reaching the breakeven level by expiration. It is therefore important to note that it does not reflect the probability of realizing maximum profit in trade (but rather any profit).

Probability of Profit should be used for informational purposes only and not construed as predictive of future outcomes.

Last updated