The next step:

• Get a more detailed "Profit/Loss" Analysis • Find out your Break-Even Level • Perform "Probability Analysis"

In PowerAnalyzer, all of this data is one click away. Click on the "Compute" button and PowerAnalyzer will provide you with all of the results. (See image below.)

The new fields that appear on your screen are as follows:

• "Prob. Of Profit" • "Exp. P/L" • "Sum Delta" • "Price/Profit/Probability" table

The first three of these are located below the Select Your Tools Here drop down menu and above the Option Matrix. The last one is located in a separate matrix to the right of the Option Matrix.

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We already know what the "Prob. Of Profit" and "Exp. P/L" fields are. The "Sum Delta" field is showing the "Summary Delta" for the entire strategy. "Delta" is the rate of change in an option's price relative to one unit of change in the price of the underlying asset. For example, if a "Call Option" on a stock has a "Delta" of 0.50 and the price of the stock increases by one dollar, the Option's price should increase by 50 cents ($1.00 times 0.50). So, in the above display, the strategy has a delta of +0.14. This means that the position can be expected to make $0.14 of a dollar if the underlying stock moves up by one dollar. Of course, in actual trading, it would be impossible to capture that type of profit so quickly due to the bid-asked spreads in the individual options.

Now let us take a look at one of the most important information tools that PowerAnalyzer provides, the "Price/Profit/Probability" table.

• Allows you to visualize what would be your "Profit" or, unfortunately, "Loss" if the price of the underlying asset will move to the indicated "Price Point.”

• Gives you information on Probability of Price for the underlying asset being less or equal to correlated Price Point on the Target Date; this calculation is done based on the volatility you selected in the "Use Vol. for Target" field. In the above calculations, we used “1 Day Implied Volatility.”

Later you will be shown how to change the volatility and produce a more in-depth analysis, but for now let us stay with the "Price/Profit/Probability" table. If you scroll through this table, you will find your breaking point and probability of the underlying price ending in certain price ranges. As you can see in our example, price points and profits change from red to black between the prices of $78.62 and $79.48. This means that our breaking point for “AAPL” is between these two price points is at $79.24. The probability of price to be equal to or less than $79.24 is approximately 10.86% (between 9.34% and 11.51%.) For a visual representation of this data, click on the Profit/Loss Graph" which is located on the top row towards the right.

PROFIT/LOSS GRAPH: As you can see from the picture above, there are two canvases.

• Top : Price and Profit graphs • Bottom : Price and Probability graphs

In order to give you a better understanding of the potential dynamic of the trade, we are plotting at least three graphs on each of the canvases.

• First : Expiration Date • Second : One week from the date when trade was initiated • Third : One is for half the way till expiration • You can add a fourth one, if you set "Target Date" not equal to one of the above dates.

In this particular sample we only have two graphs: (1) for Expiration Date (20090321) (2) one week from the initiation of the trade (20090317.) The third graph for halfway to expiration is not produced since it is less than 2 weeks till expiration.

If you want to "Zoom In" to a certain part of the chart, left click with your mouse and drag it to the right. When you release, the highlighted area would be zoomed in. To zoom out, click on the "Zoom Out" button.

DOES POWERANALYZER CALCULATE STANDARD DEVIATION OF PRICE MOVEMENT? Most of the books on option trading as well as some option educators and teachers teach you how to build certain probability trades based on the value of standard deviation; however, with PowerAnalyzer, you do not have to calculate Standard Deviation, you don't even have to know what standard deviation means. (Unless of course you want to learn the mathematics behind options trading..) PowerAnalyzer is designed to be user friendly and is performing these calculations and conversions behind the screen to provide you with information that is easy to understand. Simply scroll through the "Price/Profit/Probability" table until you find the probability you are looking for and the correlated price point. That simple!

By using the "Price/Profit/Probability" table, you can calculate the probability that the price of an underlying stock will stay at a certain interval between two price points. Scroll through the "Price/Profit/Probability" table, find the two price points you are interested in and subtract the lower from the higher of the two correlated probabilities. The result will be exactly what are you looking for – probability of the underlying stock staying between the selected price points.

For example, say you want to find out what the probability is that "APPL" will end up on March 10, 2009 between $79.48 and $82.12? (Based again on volatility equaling 54.84%.) You will need to subtract the probability of the stock being less or equal to $79.48, which is 11.51% (see the table), from the probability of 20.04%, which is correlated with the price point of $82.12. The result would be 8.53%. Simple, isn't it?