R-POP™ – Realistic Probability of Profit

In today’s lesson will be talking about R-POP™, which is a trademark of San Jose Options.

R-POP stands for realistic probability of profit. We arrive at this calculation by removing the necessary amount of risk from a trade’s risk profile and then calculate the probability of profit after. So the R-POP™ is a probability measurement of an option spread which only includes acceptable risk for that trade.

In the options trading industry option traders traditionally calculate probability by looking ahead to expiration date. This method is known as the POP (probability of profit). The POP includes all risk associated with the trade inside the profitable zone before the trades reaches expiration. Therefore, using the traditional POP as a way to calculate probability, is not realistic for option spreads that have high short-term risk. For most option spreads, you cannot possibly utilize the POP or you would wipe out your trading account. Therefore, the POP is an obsolete method to calculate probability for option traders.

San Jose Options developed the R-POP in order to calculate a realistic probability of profit which addresses the shortfalls of the traditional methods known as the POP. The R-POP can be found in our software only, and it gives you a far more accurate picture of the probability of your option spread. More accurate trade analysis leads to better performance and eventually higher consistent returns over time.

We hope you’ve learned some new things about calculating probability, and if you have any questions about our mentoring program, please feel free to schedule a live demo. You’d be glad that you did.

R-POP™ is a registered trademark of San Jose Options. Use of our trademarks falls under San Jose Options – .

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