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PLAIN-ENGLISH OPTIONS GUIDE

Probability of Profit vs Probability of Touch vs Target-Hit Probability

Learn why common options probability labels answer different questions and should not be treated as interchangeable.

Published 2026-09-21 · Updated 2026-09-21 · Not an independent expert-review date

A percentage without a precise event, deadline and model is not actionable evidence. “Profit,” “touch” and “hit my target” are different outcomes.

Define the event first

Probability of profit may mean positive value at expiration under a pricing model. Probability of touch concerns whether price reaches a level at any time before a deadline. Target-hit probability should refer to the chance that the whole position reaches a specified net P/L after costs under an explicit exit rule.

Those quantities differ because a price can touch a strike and reverse, or a stock can finish favorably while the option position loses after premium, time and volatility effects.

Model probability is not a win rate

A theoretical probability derived from current inputs is conditional on assumptions. A historical win rate summarizes a particular sample and rule set. Neither becomes a calibrated forecast merely because it is displayed to one decimal place. Calibration requires enough forward observations and comparison of predicted ranges with actual outcomes.

A platform should preserve the original prediction, timestamp, contracts, entry assumptions and outcome definition. Otherwise later edits can create hindsight bias.

Questions to ask when you see 70%

Ask: 70% of what, by which date, before or at expiration, before or after costs, using which price and volatility model, and validated on what independent sample? If those answers are missing, treat the number as a scenario-model output rather than a trading signal.

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