Comments on: Stock Option Trading Probability

By: Charles Webster

Charles Webster — Thu, 06 Apr 2006 20:00:30 +0000

Allen…I am a perennial Options STUDENT who seems never smart enough to graduate…but I think the crucial positions
to calculate the probability of touching would be the SHORT
STRIKES of an IC………traderkip

By: Allen Forsythe

Allen Forsythe — Sun, 19 Mar 2006 16:04:52 +0000

A quick theoretical question about probabilities for Iron Condors. Because the outcome of each leg of the spread is mutually exclusive, shouldn’t the probability that the entire strategy will finish in the money just be the greatest of the probabilities of either leg?

I can’t quite grasp this concept and would appreciate any input you have.

Thanks!

Allen

By: Greg Zerenner

Greg Zerenner — Mon, 13 Mar 2006 15:33:45 +0000

Hi Ira:

A “BIN” is like a bucket for data. When you analyze how often something was to happen, you need to separate the “SOMETHINGS” into buckets, then count the occurances of the “SOMETHINGS” for each bucket/bin.

In this case, each “BIN” is a % change, and the frequency is how many times the data shows a % change that is in the range of the bin.

So for example, if you wanted to count how many times RED, GREEN, or BLUE came up in a random box of mixed crayons…You would have 3 bins. 1 for RED, 1 for BLUE, and 1 for GREEN.

Hope this helps.

By: Ira Kierstein

Ira Kierstein — Mon, 13 Mar 2006 15:09:18 +0000

WHAT DOES “BIN” REPRESENT IN YOUR DATA?? THANK YOU, IRA