Probability Cone Visualizer

Understanding the Probability Cone

This tool visualizes the probable price range of an asset based on its volatility and your selected time horizon. The cone widens over time, showing how uncertainty increases the further out you look.

Key Concepts:

• Volatility measures how much the price fluctuates - higher % means wider potential ranges
• Standard deviations show probability ranges (1σ = 68%, 2σ = 95%, 3σ = 99.7%)
• Time horizon affects the range - volatility compounds with the square root of time

How to use this in trading:

• Set realistic profit targets and stop losses based on probable ranges
• Understand how option premiums reflect these probability distributions
• Visualize why longer-dated options have wider breakevens
• See how volatility changes affect your position's risk profile

Remember: The market is non-linear and path-dependent. These are statistical probabilities, not guarantees. Always manage risk accordingly.