Market Measures

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Alpha and Beta

Market Measures

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

We often discuss beta, a measure of systematic risk for a portfolio or asset, but we rarely discuss alpha.

Alpha is another important metric that estimates the percent excess return on an investment relative to some benchmark (the S&P in our case).

Alpha is a great way to estimate how well a strategy is outperforming the market - today we investigate how well a portfolio of actively managed 16 Delta SPY strangles performs relative to major tech stocks using alpha and beta.

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