How To Use Helium's Future Price Uncertainty

Helium models with Green “Future Uncertainty” buttons feature a prediction of future uncertainty.


future_price_uncertainty


Updated daily, the Future Uncertainty graph compares Helium’s projected future price distribution in ~50 days to the market’s expected price distribution as reflected in options prices.

csco_future_uncertainty

The x-axis represents potential future price in $. The y-axis represents estimates of the likelihood of the price ending up at each potential price, where higher values mean more likely, and lower values less likely.

Discrepancies between Helium’s estimate and the market estimate could indicate potential mispricings and an opportunity for profit. For example, on the above graph, Helium thinks the right tail of the distribution is less likely than the market thinks it is. A short-volatility/short-delta strategy (such as selling an out-of-the-money call) could potentially take advantage of this.

However, always keep in mind that Helium’s expected likelihood is just an estimate. Given that all models are wrong, it’s prudent to not interpret the models too literally.

In reality, there is no such thing as an “expected future price distribution.” Contrary to popular belief, there’s not even such a thing as the probability of a future event. Since the map is not the territory, any expected distribution is merely a relative expression of uncertainty. Keep that in mind.

Helium is in no way responsible for the accuracy of any of our strategies, models, or forecasts. Helium is for informational purposes only.