Tom Preston Explains the Options Metric He Invented 25 Years Ago

Tom Preston walks through probability of touch, a number he created 25 years ago that most traders never use. Unlike a standard probability, it tells you the odds a stock hits a certain price at ANY point before expiration, not just lands there at the end, and it runs roughly double the delta. He shows three uses: sizing a trade, judging whether the stock breaches your short strike, and on a loser, the real odds it rallies back to break even. 📊 tastylive: https://www.tastylive.com/ 📰 Get Tom's pre-market analysis every morning: https://www.tastylive.com/newsletters 📘 FREE Options Strategy Guide: https://tinyurl.com/bp9ms763 📱 Follow tastylive on X: https://x.com/tastyliveshow Chapters 00:00 The question every options trader asks 00:25 Probability of touch, invented 25 years ago 00:46 Reading it on the chain, Meta example 01:35 What a 46% touch really means 02:18 Using it to size a short put 02:40 How time shrinks the touch odds 03:39 Flipping it to a losing trade 04:55 The odds of rallying back to break even 06:42 Rolling out to buy more time 07:54 The caveat, it's all theoretical #tastylive #cherrybomb #tompreston #probabilityoftouch #delta #optionsforbeginners #trademanagement #impliedvolatility #optionstrading #stockmarket tastylive is a real financial network, producing hours of live programming every day. Follow along as our experts navigate the markets, provide actionable trading insights, and teach you how to trade. With over 120 original segments, and over 25 personalities, we'll help you take your trading to the next level, whether you are new to trading or a seasoned veteran. tastylive content is created, produced, and provided solely by tastylive, Inc. ("tastylive") and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read all applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange Traded Options Risk Disclosure Statement found at https://tastytrade.com/disclosures/. Past performance is not indicative of future results. Performance is not presented net of all commissions, fees, and expenses. Multi-leg option strategies incur higher transaction costs than single leg trades as they involve multiple commission charges. Examples provided are for illustrative, informational, and educational purposes only and are not intended to be reflective of results you can expect to achieve. Supporting documentation for any claims, including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.