02-20-2019, 02:31 PM
(This post was last modified: 02-20-2019, 02:32 PM by crimsonghost747.)
(02-20-2019, 10:08 AM)Kerim Wrote: Do you guys track your options performance in any formal way? If so, how? I figure it is easy enough to track the return on any individual trade, but across trades where a small percentage of the puts you sell are exercised, how do you determine overall return? Seems you can only measure against hypotheticals ("well, I would have bought it at X, so the fact that the shares were put to me at Y, and commissions were Z, so I gained / lost Q....").As a pure trading strategy, it's easy enough to calculate as I'll get an entry and exit price, usually not more than a week or two apart. Add the premiums, commissions, possible taxes and you should be done.
Now if you use a put to enter a long term position with no plans of letting go off the shares, then it might be a bit more complicated. But I guess then you should count it like you do with the rest of the portfolio that has unrealized losses/gains. Buy price is X, premium is Y, current price is Z so Z + Y - X = unrealized profit. It's no different than the rest of your holdings.
For yearly returns, I make it simple for myself. I have a certain amount that I'm willing to use for options trading, sometimes (like now) I have zero options so I'm not using that money, and sometimes I might go a few thousand above my own limit. But I just calculate it as if my set amount would be used 365 days a year, since it essentially is there only for these trades, whether or not it's actually used or just lying there on my account waiting.