When it comes to trading options, depending on our trading style it is very important to know how probable is our strategy to make a profit or a loss.

With an options probability calculator Excel spreadsheet, we will be able to learn before opening any trade how probable is our contracts to make money or not.

On this page, you will be able to download our free Options probability calculator Excel and we will explain to you how it works and how it calculates the probabilities for our contracts

Download here the Free Options Probability Calculator Excel Spreadsheet

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How does our Free Options Probability Calculator Excel obtain the probabilities?

First, we need to understand that there are several ways to calculate the probability of option expiring in the money or the probability of profit.

We could either choose the Greek Delta or we could use the Black-Scholes formula designed to obtain the probability of an option expiring in the money.

Either way, we have included both possibilities on our free Options Probability Calculator Excel. Let us break them down.

How to calculate the probability of profit in options in our free calculator

Option probability of profit formula: delta

The greek Delta is widely used to calculate the probability of the option expiring in the money when the expiration date arrives. The easiest way to calculate it is by obtaining the formula of this greek, provided by the Black-Scholes option model.

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Option probability of profit formula for delta

Once we have obtained the option delta probability, the only thing we need to do is to multiply its value by 100. That will provide us with the probability of profit of our option.

To calculate this value in our free option probability calculator excel, we will only need to type the values of the underlying, strike, volatility, days to expiration, interest rates, and dividends of the options we want to calculate.

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The option delta probability approximation is quite accurate when it comes to trading options. If you want to know more about this, we highly recommend you to take a look at this article here.

Option probability of profit formula: the Black-Scholes approximation

The second way in which our Free Options Probability Calculator excel obtains the probability is by making use of the following formula that is included in the Black-Scholes model:

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Option probability of profit formula for Black-Scholes

By using this formula, we will be displaying the probability of our option to expire in the money. Again, in order to use it in our Free Options Probability Calculator excel, you need to type the six parameters of the Black-Scholes calculator

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Which option probability of profit is better?

While both formulas provide us with the probability of profit, it is very easy to see that there is a huge difference between the results that provide us.

In any case, we prefer choosing the option delta probability, as we believe is more accurate than the Black-Scholes approximation.

In any case, remember that the probability of profit is not a guarantee of a win, because there are many other factors involved, just like we discussed in this study about probabilities and market neutrality