……. Every Successful Options Trader Follows
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Most successful options traders don’t try to outguess the market. They rely on one of the most time-tested statistical principles: the Law of Large Numbers.
This principle tells us that the more trades we place, the more our actual results will mirror our expected outcomes. For traders using probability-based strategies, this isn’t just theory—it’s the foundation of consistent performance.
Probability Is a Long Game
If you’ve ever flipped a coin 100 times, you’ve witnessed this law in action. You know that the odds of landing heads are 50%, but in a small sample—say 10 flips—you might get 7 heads or only 3. That’s variance at play.
Over time, however, those results normalize. By flip 500 or 1,000, the results gravitate toward that 50% mark. This is what allows quantitative traders to trust their edge, even when short-term results stray from expectations.
In trading, this plays out through sequencing risk. You might experience a string of wins or losses that don’t align with your long-term probabilities. These streaks, while frustrating or exhilarating, don’t change the math. What matters is maintaining consistency long enough for probabilities to assert themselves.
Why This Matters for Options Traders
Unlike a coin flip, the strategies I use have a built-in statistical edge. Many of the positions I place—credit spreads, iron condors, and other premium-selling strategies—carry probabilities of success between 70% and 85%.
Over time, if I stay disciplined and manage risk effectively, I expect my win rate to reflect those odds. That’s the real power of the Law of Large Numbers: it rewards consistency, patience, and rule-based trading. It’s also why professional options traders often thrive over decades, while many directional stock traders fade away.
Managing Expectations in the Real World
To illustrate, here’s a high-probability setup using DIA, the Dow Jones ETF.
DIA is trading for $406.45. Since we are on Slope, let’s say we have a bearish outlook, so we use a bear call spread—a defined-risk credit strategy that lets you choose your probability of success. As can be seen in the peach colored bar below, the expected move to the upside sits at roughly 425.
As a result, let’s sell the 435 call and buy the 440 call, both expiring on June 6, 2025 (37 dte). The credit received is approximately $0.70, which equates to a potential return of 16.3% on risk over 37 days, although I typically take off the trade early if profits are available.
Most importantly, the probability of success on the trade is a staggering 89%. That means, over time, if I make enough trades like this, I can reasonably expect to win around 8 out of every 10.
And because it’s a risk-defined trade, my maximum loss is capped, my reward is known upfront, and my margin for error is just under $30 (435 strike – 406.45 current price). That’s the structure we need to trade like professionals—not speculators.
Why Patience Wins
Many traders understand probability. Few are patient enough to let it work. They get discouraged after a loss or two and abandon the plan. But if the math behind your strategy is sound, walking away early means you never give yourself the chance to see your edge play out.
Remember: even with an 89% win rate, you’re going to lose 11% of your trades. The question is whether you’re prepared—emotionally and strategically—to stick with your process long enough for the numbers to work in your favor.
The Law of Large Numbers is simple. But that doesn’t mean it’s easy to follow. That’s why I structure my trades using strict position sizing, risk-defined setups, and high-probability entries.
Trading success isn’t about winning every time—it’s about knowing your odds, sizing appropriately, and giving the numbers time to work.
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Probabilities over predictions,
Andy Crowder
