Probability of Profit/Success

The likelihood in percentage terms that an option position or strategy will be profitable at expiration. For spreads like short verticals or iron condors, you can estimate the probability of success by taking the max loss of that position and divide it by the distance between the long and short strikes. So, if you sell a 100/105 call spread for 2.00 credit, the max potential loss is $300. If you take $300 divided by $500, you get a probability of success of 60%.

This is a definition, not a recommendation. Options carry risk and can expire worthless. See how the desk actually trades at TrueTrader.