what is a discrete probability model 
a discrete probability model is a statistical tool that takes data following a discrete distribution and tries to predict or model some outcome such as an options contract price or how likely a market shock will be in the next five years the bottom linediscrete probability distributions are graphs of the outcomes of test results that are finite such as a value of 1 2 3 true false success or failure investors use discrete probability distributions to estimate the chances that a particular investing outcome is more or less likely to happen armed with that information they can choose a hedging strategy that matches the probabilities found in their analysis 