Positive Asymmetry

Positive Asymmetry is an asymmetric risk/reward profile that is positively imbalanced or skewed toward the gain than loss. Investors prefer to capture more of the upside, less of the downside.


Positive Asymmetry of a trade payoff (asymmetric payoff) is when the downside is limited, but the upside is unlimited.

Positive Asymmetry is positive asymmetrical risk/reward occurs when the potential or realized reward is greater than the potential or realized loss.

In probability theory, the skew is a measure of the asymmetry of the probability distribution. With each graph below, the values on the right side of the distribution taper into tails, so they provide a visual observation to determine which of the two kinds of skewness a distribution has: positive or negative.  A negative skew is a left-skewed distribution usually appears as a right-leaning curve. A positive skew is a right-skewed distribution that appears as a left-leaning curve.



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Positive Asymmetry click for PDF: Positive Asymmetry

Keywords: positive asymmetry, positive asymmetric risk/reward, asymmetric returns, asymmetric payoff


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