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Options by Michael C Thomsett

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Chapter 10 Calculating the Return: A Complex Aspect to Options

A criminal is a person with predatory instincts who has not sufficient capital to form a corporation.

̶̶ Howard Scott, The New Dictionary of Thought, 1957

The return calculations on options trades can be complicated. When you consider the various elements, including your basis and profit in stock, dividends earned, and the time your positions remain open, this is no easy matter. The real challenge is achieving consistency in terms of calculation basis, holding periods, and what to include or exclude.

There are several potential methods for return calculations, and the most important points to remember are: The method you pick must be realistic, and annualization is a means for comparing ...

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