What is probability of profit?Probability of Profit
The estimated chance a position makes money at expiry based on current implied volatility; it's a model estimate, not a guarantee.
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- Advanced Option StrategiesIron Condors: Betting on a Range
Sell a strangle to collect premium, then buy protection further out on each side. Risk is capped, and you make money if the stock stays in the range.
- Advanced Option StrategiesStraddles and Strangles: Betting on a Big Move
Not sure whether it'll go up or down, only that it'll move a lot? Buy a call and a put together. Same strike is a straddle; different strikes is a strangle.
- Advanced Option StrategiesVertical Spreads: Bull and Bear Spreads
Buy one option and sell another of the same type at a further strike: it costs less, and both the gain and the loss are capped.
Related terms
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Go to “Iron Condors: Betting on a Range”