Probability of the gap filling to the downside today

just check where a one-day touch option with strike equal to last friday's close trades. The price expressed as a % of a 100% equals the probability of filling this gap.
 
Quote from Alexandre:

just check where a one-day touch option with strike equal to last friday's close trades. The price expressed as a % of a 100% equals the probability of filling this gap.
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Cool!
(learn something new every day!)

thanks
 
a one touch option will pay 100% of a specified notional if at any time during the day we hit 1405 on the cash.

the price of such an option maybe quoted 57% - 62% meaning that you can buy this option for 62% of the specified notional or you can sell it for 57%.

Let's say you believe we will fill the gap and are willing to bet around $6,000 (these options are also called American bets).

You can go and pay $6,200 for this option. If we hit 1405, the option is extinguished and you earn $10,000 minus $6,200 so $3,800.

It also means that the probability we will hit 1405 on the cash is around 60%.

hope this helps
 
Quote from Alexandre:

a one touch option will pay 100% of a specified notional if at any time during the day we hit 1405 on the cash.

the price of such an option maybe quoted 57% - 62% meaning that you can buy this option for 62% of the specified notional or you can sell for 57%.

Let's say you believe we will the gap and are willing to bet around $6,000 (these options are also called American bets).

You can go and pay $6,200 for this option. If we hit 1405, the option is extinguished and you earn $10,000 minus $6,200 so $3,800.

It also means that the probability we will hit 1405 on the cash is around 60%.

hope this helps
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Yes it does
thanks for the insight!
 
Thanks for the definition, Alexandre. Where do you find the quotes for one-touch options?

Quote from Alexandre:

a one touch option will pay 100% of a specified notional if at any time during the day we hit 1405 on the cash.

the price of such an option maybe quoted 57% - 62% meaning that you can buy this option for 62% of the specified notional or you can sell it for 57%.

Let's say you believe we will fill the gap and are willing to bet around $6,000 (these options are also called American bets).

You can go and pay $6,200 for this option. If we hit 1405, the option is extinguished and you earn $10,000 minus $6,200 so $3,800.

It also means that the probability we will hit 1405 on the cash is around 60%.

hope this helps
More...
 
thanks guys.

I believe you can get quotes from igindex.co.uk and clickoptions.com but you may need an account. I'm not affiliated or have an account with any of the above.

good trading
 
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