Screening and probability

Learn to turn a large option chain into a manageable research list without confusing a filter with proof of a good trade. Interpret probabilities, test liquidity, review event dates, and account for execution costs.

By OptionsKing. Publisher and editorial methods.

Learning path

For probability, read profit, full-credit, and touch events, the limits of a delta shortcut, and expected value and pricing probabilities.

For candidate selection, follow the screening funnel, liquidity checks, and event windows. You should be able to explain why a contract passed each filter and what still needs judgment.

Lessons

• Profit, finish and touch probabilities: define the eventFinish, touch and profit probabilities describe different events. Define the event and the whole position before interpreting a percentage.
• Expected value of selling options: payoffs, probabilities and costsExpected value combines probability with payoff size. State the probability model before calling a trade fairly priced or profitable.
• The 20-delta shortcut: what it estimates and what it does notThe 20-delta shortcut is a rough call-exposure guide. It is not a forecast of assignment or a guarantee of whole-position profit.
• Probability cones: ranges, assumptions and tail riskA cone visualizes a distribution at different horizons. It does not show a boundary the stock must stay inside.
• Screening covered calls: filters and investment judgmentA screen narrows contracts under stated rules. Track the funnel, then evaluate stock ownership, concentration and executable prices.
• Options liquidity: spread, size, volume and open interestLiquidity is specific to a contract and moment. Use spread, activity and displayed size together rather than relying on one cutoff.
• Bid-ask spread costs: calculate entry, exit and repeated tradingExecution changes the return before commissions appear. Compare actual fills with a stated reference on both entry and exit.
• Limit-order fills: price, liquidity and execution trade-offsA limit controls price, not execution. Compare the value of a concession with the changing market and your minimum acceptable credit.
• How to evaluate an options tradeEvaluate a shortlist with consistent criteria, then make the ownership and sizing decision. A high quoted return cannot answer every check.
• Earnings and ex-dividend dates: screen event exposureCheck earnings before entry and dividend incentives while a call is open. Different calendar events create different exposures.

What the example screen demonstrates

The illustrative screen starts with 812 contracts across 60 names and ends with four candidates. The Cisco example connects a quoted premium, modeled probabilities, and execution costs. Counts and prices describe a worked scenario, not today's available trades.

A high modeled win rate can coexist with a poor payoff distribution. Risk-neutral probabilities used in pricing are not observed success rates, and keeping a full option credit is not the same event as earning any profit on the whole position.

Common questions

Run your own numbers

• Assignment probability calculator delta to keep-odds, and probability of touch.
• Black-Scholes calculator the model every probability on these pages came out of.
• Covered call calculator the position the whole series follows.
• Per-ticker screens dated snapshots across 60 liquid names.

Sources

• OIC, Understanding Options Greeks
• OIC, Options Pricing

Rules and thresholds above were checked against these documents on October 17, 2026. Exchange and broker rules change. Confirm anything you are about to act on with your own broker.