Market Measures

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Naked Premium Profit Margins

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 use average P/L to analyze performance of strategies. Today, we look at profit in terms of percent of credit.

  • SPY, IWM, TLT, EEM, 2005 to Present
  • Every trading day sold closest to 45 DTE
  • Divided each P/L by its initial credit and averaged the percentages
  • Average profit was between 10%-21% of credit collected

We can us this information in building estimates of what we may profit on average.

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