The Daily Option: Option probability math.
I read an article yesterday on the Steemleo feed about options probabilities, which is part of a investment article series called “The Daily Option”. I though the article did a good job of explaining the math, but I wanted to point out that thinking about outcomes and probabilities of success are important in all aspects of our life. If we assess things in terms of risks, benefits and probability of success we start to look at things very differently.
For example: You child wants to apply for a job, where the median wage is minimum wage. Now your child may think he is worth more, but 50% of the time that’s what your child will earn. But if another similar job has a median salary 150% above the minimum wage, your child has a 50% chance of making a significantly higher salary. This is a practical application of probabilities in the job market. The great thing is that when you look up jobs on these job sites they have separate tabs which tell you what the range of salaries are for the job your looking at, including the median, so the math is done for you, you just have to apply it to your thinking.
Another example: My favorite example of probabilities in everyday is the lottery. People buy tickets for 1$ dollar because “somebody has to win” but when they sell 20 million tickets the possible outcomes are 19 million 999,999 tickets you don’t buy could be the winner versus the one ticket you buy is the winner. So while your very small odds of winning are very small one out of 20 million, the odds of you losing are very great 19,999,999.00 to one. I know some people say this thinking takes the fun out of life, but I prefer to think of it as choosing to play when I have a chance to win. After all how much fun is it to play a game where you always lose? 😕🧐😏
Please check out this article, it helps bring clarity to your options.
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