Options Jive

Monday – Friday | 8:40 – 9:00a CT

Understanding Research: Average P/L

Options Jive

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

Tom and Tony invite James into the studio to run through a complex Options Jive, looking at Average P/L.

They walk through why the team sees this as a cornerstone metric of any backtesting study. Combined with Success Rate, Average P/L is the definitive metric of whether a historical strategy was profitable or not.

James uses a small hypothetical data sample to explain Average P/L and Success Rate. Average P/L demonstrates whether the winning trades, combined with a high success rate, are enough to offset the losses. This would indicate a net profitable strategy historically.

The final point the guys discuss regards using a median metric. Medians are an imperative statistical metric, however, in this case a median skews the P/L.

Tune in for the full discussion!

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