how to calculate annualized return for short option positions

Discussion in 'Options' started by teachamantofish, Dec 17, 2017.

  1. ironchef

    ironchef

    Yes, I stand corrected.
     
    #11     Dec 18, 2017
  2. I still have to vet these formulas with some simulated trades. The Return is calculated manually since there maybe rolls or other aspects of the trade that affect that value. But assuming you have that number, here's what I have so far.


    upload_2017-12-23_11-48-17.png
     
    #12     Dec 23, 2017
  3. IgorVI

    IgorVI

    If you bought 100 shares of stock at $50 and put up 100% or $5K for it and then sold a call against it for $1 with 30 days to expiry, your annualized return would be premium over margin, divided by number of days held, multiplied by 365. I think white it's very unlikely that the stock you bought will go to zero in 30 days, that is still the capital you had to put up and therefore your risk.
     
    #13     Dec 31, 2017