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Inside the Normal Distribution

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Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

The normal distribution gives us insight into how likely certain data points are to occur and with what probability.

Roughly 68% of data is to occur within 1 standard deviation, 95% within 2 SD, and 99% within 3 SD.

By looking at the average and standard deviation of the distribution, we can understand what will happen over a large amount of trails (the average) and what variation we can expect in the short term (the standard deviation).

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