Hypothetical scenarios

Trade logic score examples

The same reward/risk can receive very different scores depending on thesis quality, sizing, liquidity, correlation, and exit planning.

ScenarioScore areaWhyLikely rating
Defined-risk spread, clear catalyst78–88Positive EV, defined loss, tight plan, low overlapStrong
Good idea, sloppy exits55–70Thesis is plausible but invalidation or profit plan is vagueConditional
Big undefined riskUnder 45Loss undefined, sizing too large, liquidity weakReject

These are examples of the framework, not market forecasts or performance claims.

Primary reading: Investor.gov risk tolerance overview · FINRA options overview and risk · SEC Investor Bulletin on options · OIC options pricing overview · OCC Options Disclosure Document

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Related lessons and tools on this site

Start with the main guideInstitutional-Style Trade Logic TestComplete Scoring Formula and MethodologyExpected Value in Trade ReviewPosition Sizing and Risk BudgetingCorrelation and Concentration RiskLiquidity and Execution QualityVolatility and Market-Regime FitCatalyst and Timing QualityExit Plan and Invalidation ChecklistTrade Logic Test FAQSources and Methodology for Trade Logic Test
Reviewed/updated 2026-07-30 · SourcesMethodologyRisk disclosureCorrections

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