Formula notes and scoring logic
The model uses deterministic arithmetic: expected value, reward-to-risk, portfolio risk, cost drag, data completeness, catalyst/expiration pressure, and liquidity. It does not invent probabilities or market data.
| Metric | Meaning |
|---|---|
| Expected value | Probability-weighted reward minus probability-weighted loss and costs, when probability is entered. |
| Portfolio risk | Maximum loss or collateral compared with account size and buying power. |
| Data confidence | Penalty when key inputs such as probability, volatility, liquidity, or exit rules are weak or missing. |
Optional next step
Plan put-selling risk with the Options Formula community
Get the options process in one place: structured trade ideas, research tools, calculators, education, market context, and support from traders focused on defined-risk setups.
No hype, no promises of wins, and no pretending every setup works. The free group is built to help you make every trade a clear decision instead of a reaction.
- Defined-risk options education and structured trade ideas
- Strike prices, expirations, suggested entries, profit targets, and exit planning
- Market updates, practical analysis, trading research, and a live trade tracker
- Community access to tools including Insider Edge, the Custom AI Trade Analyzer, and an advanced options calculator
Optional related resources