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Implied Volatility (IV) reflects the market's expectations for how much a stock or ETF might move in the future. It's derived from the price of options and represents how expensive or cheap those options are relative to historical norms. Higher IV generally means traders expect larger price swings, while lower IV suggests a calmer outlook. At OptionTerminal, we use market-based IV to power our strategy calculations and modeling.

We source market data from multiple reputable third-party providers. While most prices are up-to-the-minute, some feeds may have delays ranging from 0 to 30 minutes depending on the provider or free source.

OptionTerminal is currently free. We are excited to build out new robust and highly desired features as the community grows.

Our optimization engine runs through hundreds to thousands of possible combinations within each strategy framework (e.g., bull put spreads, iron condors). Users can then filter these combinations by metrics like probability of profit, expected value, risk/reward ratio, breakeven range, and more. This helps surface trade setups that match your risk preferences and market view.

All real-time, current option prices are streamed from our data providers. All derived option prices shown in our tools are calculated using the Black-Scholes model, adjusted for each contract's specific implied volatility. For multi-leg strategies, we consider the aggregated payoff of the individual contracts based on their respective IV's. Note that Black-Scholes assumes European-style options and does not factor in dividends or early assignment risk.

Probability of Profit is an estimate of how likely a strategy is to end in profit by expiration. We calculate PoP using a statistical model based on the normal distribution. For example, in a short call vertical, we estimate the probability that the underlying asset finishes below the short strike by expiry. This is done using the formula: z = (strike - spot price) / standard deviation PoP = cumulative probability(z) This method is generalized across all strategies we support. While it's a useful reference, it does not account for changing volatility, early assignment, or intraday price movements.

Terminal Score represents the expected value you might expect from a trade if you could repeat it many times. We compute this using probability-weighted outcomes of each leg, factoring in risk-neutral probabilities derived from current market prices. For strategies with unbounded payoffs, we model future stock prices using a log-normal distribution based on implied volatility, which naturally caps extreme price movements while maintaining mathematical rigor. This approach provides realistic profit/loss expectations by incorporating both the probability and magnitude of different outcomes. The model does not currently include fees or slippage.

Models are simplifications—they assume ideal conditions: stable volatility, perfect execution, and no unexpected events. In practice, the market moves continuously, spreads change, and implied volatility reacts to headlines, earnings, or macro events. Our tools aim to give you a statistically informed view of potential outcomes, but they don't—and can't—predict surprise moves, news shocks, or execution frictions. Always use the output as guidance, not a guarantee.