How the heck are they calculated on a put sale? Since I’m really bored today I tried to put this in writing. I’m not the greatest math guy out there so absolutely looking for corrections and errors here.

This assumes 100 percent cash secured required like in a typical tax deferred retirement account.

————————————————————————————–

Calculating Annualized Returns On A Put Sale

(Strike Price x 100) – Premium Received = Margin Required

then:

Premium Received / Margin Required = Actual Return

then:

365 / Days in Position = Possible Trades Per year

then:

Possible Trades Per Year x Actual Return = Annualized Return

EWZ example:

3600 – 105 = 3495 (margin required)

then:

105 / 3495 = .0300429 (return for 53 day trade)

then:

365 / 53 = 6.8867924 (possible trades per year)

then:

.0300429 x 6.8867924 = .2068992 (annualized return)

20.7 annualized rounded