Monte Carlo Techniques: Probability of Making 50% on Short Options Trades Using Python

We use the Monte Carlo techniques developed in a previous video that we used to model a stock’s price action and extend it calculate the probability of making 50% of the maximum potential profit on a short option trade, a short call to be specific. To help get the gist of this technique, we’ll first start off calculating the probability of making any profit assuming the contract is held until expiration. In a follow on video, we will extend this to more complicated spreads such as short strangles, iron condors, or verticals.

Probability of a Touch where we first showed a random walk model of a stock: https://youtu.be/PRLnusDWSW0

Linear Systems and Sparse Matrices: https://youtu.be/Xn35Ac_fGrA

Github: https://github.com/kpmooney/numerical_methods_youtube/tree/master/prob_50

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