Opportunity Analysis
Deep dive into opportunity details to make informed trading decisions.
Accessing Opportunity Details
Click any opportunity in your dashboard or opportunities list to view detailed analysis:
- Navigate to Opportunities page
- Click on any opportunity row
- View comprehensive trade details and metrics
Key Metrics Explained
Return on Risk (ROR)
The potential profit as a percentage of capital at risk.
Formula:
(Max Profit / Max Loss) × 100
Example:
$50 credit / $450 risk = 11.1% ROR
Good Target:
15-30% for spreads
Higher ROR indicates better risk-adjusted returns, but may indicate higher risk.
Probability of Profit (POP)
Statistical likelihood the trade will be profitable at expiration.
Calculation:
Based on delta and standard deviation
70% POP:
7 out of 10 similar trades profit
Typical Range:
50-85% for spreads
Higher POP usually means lower profit potential. Balance is key.
Premium Collected
The net credit received when opening the position.
Credit Spreads:
Cash in your account immediately
Debit Spreads:
Cash paid to open position
Profit Goal:
Keep the full premium at expiration
Days to Expiration (DTE)
Number of days until the options expire.
0-7 DTE:
Weekly options, high theta decay
30-45 DTE:
Sweet spot for many strategies
60+ DTE:
Longer-term, slower decay
Optimal DTE depends on your strategy and risk tolerance.
The Greeks
Delta
Measures price sensitivity to the underlying stock movement.
- Positive Delta: Position gains when stock rises
- Negative Delta: Position gains when stock falls
- Near Zero: Neutral position (Iron Condors)
Example:
Delta of 0.30 = $30 gain per $1 stock move
Theta (Time Decay)
Amount the position value changes each day due to time decay.
- Positive Theta: You earn money as time passes (credit spreads)
- Negative Theta: You lose money as time passes (debit spreads)
Example:
Theta of +$2.50 = earn $2.50/day
Vega (Volatility)
Sensitivity to changes in implied volatility.
- Positive Vega: Benefit from rising volatility
- Negative Vega: Benefit from falling volatility
Example:
Vega of -$5 = lose $5 per 1% IV increase
Trade Structure Details
Spread Components
Each opportunity shows the exact options to trade:
- Symbol: The underlying stock (e.g., AAPL)
- Expiration Date: When the options expire
- Strike Prices: The specific strikes to buy/sell
- Contract Type: Call or Put
- Action: Buy or Sell for each leg
- Quantity: Number of contracts (usually 1)
Risk Analysis
Key Risk Factors
- Max Loss: The most you can lose on the trade
- Max Profit: The most you can make
- Break-Even Point: Stock price where profit/loss is $0
- Assignment Risk: Possibility of early assignment (for spreads with short options)
- Liquidity: Bid-ask spread and volume considerations
Profit/Loss Diagram
Visual representation of the trade's potential outcomes:
- X-axis: Stock price at expiration
- Y-axis: Profit or loss amount
- Green Zone: Profitable price ranges
- Red Zone: Loss price ranges
- Break-Even Lines: Where profit = $0
Taking Action
Next Steps
- Review all metrics - Ensure they align with your strategy
- Check current market conditions - Verify prices are still valid
- Track the opportunity - Add to watchlist for monitoring
- Execute in your broker - Enter the exact spread shown
- Set alerts - Monitor position and adjust if needed
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