Market Measures

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ROC, Risk, and P/L

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.

This segment of Market Measures looks at why relying only on return on capital (ROC) does not always generate high long term performance.

On average, Iron Condors have higher ROC than Strangles. Yet, based on our study, we see that Iron Condors also carry more risk.

The study shows that the Strangle has a higher win rate and about half the risk of the Iron Condors. Just because ROC is high for iron condors, does not mean performance will be higher. High ROC does equate to higher risk, however.

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