This segment discusses Expected Portfolio Returns (EPR) and the three different ways of analyzing them; targeted annual return, ROC to reach the targeted annual return and theta decay per day. This is a new area of discussion for tastylive.
A formula of expected portfolio returns (EPR) was displayed. The formula was EPR = Average return on capital (ROC) per day x 365 days. Every time we discuss days in this segment it means calendar days, not trading days.
A table of the target annual return was displayed. It demonstrated how many days were necessary to reach a targeted return given different ROC levels. The table included annual return targets of 10%, 20%, 30%, 40% and 50%. The table included the percentage return per day of each target. An example was given and explained.
A second table of the target return on capital (ROC) per day was displayed. It included a breakdown of the percentage of capital used. The table included ROC per day of .25%, .33%, .50%, .75% and 1%. The table included the percentage of the portfolio used to reach each ROC/Day percentage. Once again an example was given and explained.
A final table of 0.1% theta decay per day was displayed. The table included total account values of $5000, $10,000, 25,000, $100,0000 and $500,000. The table showed the daily theta decay per day target in dollar terms for each account level.
Watch this segment of “Options Jive” with Tom Sosnoff and Tony Battista and special guest from the research team Chris Grace for the takeaways and to learn all about portfolio returns and calculating how to reach your desired returns by using different levels of capital.
This video and its content are provided solely by tastylive, Inc. (“tastylive”) and are for informational and educational purposes only. tastylive was previously known as tastytrade, Inc. (“tastytrade”). This video and its content were created prior to the legal name change of tastylive. As a result, this video may reference tastytrade, its prior legal name.