TOS-Spread Hacker, NO Debit Vertical Spreads?

A

antares66

When using TOS´spread hacker i noticed that it shows me only credit spreads but no debit spreads. I entered a min. probability of 68% and a min. profit of 40%. The screen is always red what means only credit vertical spreads (Bear call spreads and Bull put spreads) show up. Does that mean that the probabilty for a win is much smaller in debit spreads in comparism to credit spreads?
In barchart you can select both directly.
 
antares66 said:
Does that mean that the probabilty for a win is much smaller in debit spreads in comparism to credit spreads?
In barchart you can select both directly.
More...

POP is inversely proportional to max return - this is pretty obvious given a simple thought experiment (you have a 100% of making $0; anything greater than that has a lower probability.) Also, given the basic mechanics of spreads plus the fact that POP is calculated as the probability of making at least $0.01, it seems fairly obvious that credit spreads will generally have a higher POP than debit spreads (think about what happens for both types of spreads in case of no/small/large favorable/large adverse movement.)

Both have the same expectancy - in fact, debit and credit spreads at the same strikes are synthetically identical - but debit spreads require price movement while credit spreads don't. So, their POP is lower but their returns are higher. It all balances out in the end.

TL;DR: if you want your Spread Hacker screen to be mostly green, set your POP filter to 45% or less.
 
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