OptionStation Pro
The Probability Curve can be displayed at the bottom a 2D Graph to show the odds of an underlying asset moving outside a range of prices within a specified amount of time. The Probability Curve appears as a red bell curve just below the Risk Graph.
The probability curve is drawn based on using currently defined Stock Volatility (set in the Settings Panel as Fixed, Historical, or VIX Index calculation) and the number of days left to expiration, calculating one standard deviation above and below the current price of the underlying asset . It shares the same X axis as the risk or sensitivity graph representing the underlying asset price. However, the Y axis along the left shows the number of days to expiration (as defined in the Settings Panel). Also notice the top left corner of this chart shows the Volatility as 30.00% which is set in the Settings Panel under the Stock Volatility section with a choice of Fixed (you define), Historical, or the VIX Index. The defined volatility and days to expiration are used to calculate the probability curve.
This Probability Curve chart can be even more useful by checking the Show Cross Points check box in the Settings Panel. Doing this on a two plot graph will draw:
Two horizontal lines on the Probability Cone marking the expiration dates; and
Two
vertical lines marking where each expiration line crosses the Probability
Curve and the vertical lines intersect the Risk Graph.
The dashed vertical lines show where the Probability Curve intersects with the plots on the Risk Graph (X-axis) and the corresponding dates on the left (Y-axis). As the number of days to expiration get less and less, the space between the vertical lines narrow.
A set of Cross Points and lines are drawn for each plot shown on the Risk Graph representing the dates defined in the Settings Panel.
The Cross Points and lines use the same color as the plots they are associated with. The graph can draw up to four plots representing four different dates between now and the day of expiration. The number of plots can be changed from the Settings Panel.