Rate of return on a buy-write

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Rate of return on a buy-write

From Neil O'Hara

CompuServe ID: [71175,1304]

This equation calculates the rate of return on a buy-write (you buy the stock, then sell a call option):

{Buy-write rate of return|

!EXPDATE = option expiry date;

STRIKE = option strike price;

STOCK = current stock price;

OPTION = current price of contract;

DIV = dividend amount (if any) stock

goes ex between today and expiry;

APR% = annualized rate of return!

365/DDAYS(CDATE,EXPDAT,1)*100than

(IF(STRIKE>STOCK,STOCK,STRIKE)+

OPTION+DIV-STOCK)=APR%

}

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