Inquiring minds would like to know...

Discussion in 'OptionVue Forum' started by garyw, Aug 7, 2017.

  1. garyw

    garyw Well-Known Member

    Can someone comment on what this OV value represents, and if they find it a useful metric? -- The item in the RED Box in pic.

    I understand these values are related to the "selected" T+n, and the first is Expected Return, the one below is Probability of Profit, but this one with +/- remains a mystery to me. I do not currently own O.V. so am unable to figure it out, without outside assistance.

  2. PK

    PK Well-Known Member

    According to the OV manual, " below this is the expected return (E.R.), standard deviation of returns (+/-), your break-even point(s) (B.E.), and the probability of profit (P.P.); expected return, standard deviation of returns, and probability of profit figures are based on a bell curve price projection centered on today’s price."
    I personally find the expected return value useful to compare the profit potential of different positions or adjustments. Since the +/- value depends on DTE, I usually do not use it as a reference for making decisions.
    If you wish to know more about the different functionalities of OV, you can freely access the OV manual at
  3. garyw

    garyw Well-Known Member

    Thanks for the link. The documentation seems as difficult to extract desired content from as if I had written it myself! :-( <-- weak humor here
    I will "scratch my head" trying to decipher useful meaning of "standard deviation of returns (+/-)" for a bit more before throwing in the towel. -- symmetrical excursions on both sides of zero {or perhaps even if the implication is for the E.R.} (+/-) for "returns" seem nonsensical, so I must be missing the meaning. <-- Likely not worth pursuing, but one never knows.
  4. DGH

    DGH Administrator

    Hi Gary. Like Peter, Tom and I use the E.R. value for comparison purposes only. It is calculated in a manner similar to expected return values using a payoff curve and a probability distribution curve. However, if I remember correctly, they only use 12 (or maybe 20) price slices at defined intervals across the payoff curve to give the estimated value. That explains the large + or - number. But, it can be used to compare different strategies as well as (using the RTT as an example) for comparing the expected return values which would be generated by adding a PCS, doing a RH, or adding a Baby Butter. This "added value" can then be expressed as a percentage of additional margin requirement, if any, to see which might give the best bang for the buck.
    PK likes this.

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