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The Skinny On Options Modeling

Probability of Touching

The Skinny On Options Modeling

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Calculating the probability of a stock touching (POT) at a higher or lower price is a useful trading tool, but one that isn’t well understood or available.

Tom Preston explains how he calculates the POT number using exotic option pricing models, and why it’s superior to approximations.

This is why using a trading platform that has POT built into can give you an advantage over traders that don’t have access to it.

For more on this metric and how it should influence your strike selection when buying and selling options, tune into the segment.

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