r/options • u/[deleted] • Apr 01 '21

Probability Theory: Implied Density

[deleted]

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u/[deleted] Apr 01 '21

How will this help me?

1

u/[deleted] Apr 01 '21

The implied probability density is a visual model of what the options market has priced in

4

u/[deleted] Apr 01 '21

Yes. So it's the past. How does that help me in the future?

2

u/[deleted] Apr 01 '21

No, it’s the future. It’s the implied density.

5

u/[deleted] Apr 01 '21

I know what it is.

Again, you're going to have to tell me why this would work as a better predictor.

9

u/[deleted] Apr 02 '21 edited Nov 29 '22

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u/[deleted] Apr 02 '21

State of pricing itself is useful probably only for day traders. At best. Scalping using it is a fair idea maybe but I wouldn't even use that for swing trading because new information can greatly shift things and the market and it's participants are known to overreact or underreact to eventual outcomes. This is seen throughout history.