TPE, TW
Posts: 49 since Jul 2014
Thanks Given: 11
Thanks Received: 47
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You don't add commissions, you minus that off the credit.
$20 - $6 = $14 net.
Max loss = diff between strike - initial credit received
= $100 - $20 (not net here or you would be double counting commission)
= $80
$14/$80 = 17.5%
Assuming you use max loss as margin, and calculating return on margin. In case of loss, you have to incur another round of commission, assuming you didn't count it in $6. So it changes there again. If you already factored round trip but end up profiting expiring worthless, it changes again to higher ROI.
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