Calculating return on investment on leveraged positions - Aussie Stock Forums

# Thread: Calculating return on investment on leveraged positions

1. ## Calculating return on investment on leveraged positions

Example

Borrow \$12,000 and buy 1000 Shares in xyz.
Use own money to buy 12 month put at \$12.00 strike price for say \$3,000.00.
Interest @8.25% on the 12k for 12 months = \$990.00
Div recieved are say \$700.00

Sell shares say at \$18.00 at end of 12 months.

The amount of my own money needed to run this position i calculate to be MAX (by this I mean say I receive the div the day b4 I sell)

\$3,000.00 for the put plus the \$990 for the interest.
= \$3990.00

from selling the shares I received \$6,000.00 (after paying back loan) plus \$700 for divs minus the \$990 interest minus the put price \$3000.

= \$6000.00 + \$990.00 - \$700.00 - \$3000.00 = \$2710 Profit

Should I calc return of

1. \$2710/\$12,000.00 = 22%
or
2. \$2710.00/\$3990.00 = 68%

thx

2. ## Re: Calculating return on investment on leveraged positions

well it depends on what you are after.

are you after return on capital? ( 2. \$2710.00/\$3990.00 = 68% )

or return on investment (which will include capital + leverage) ?
(1. \$2710/\$15,000.00 = 18% )

3. ## Re: Calculating return on investment on leveraged positions

i think he just wants to know how other cfd traders calculate it...

#### Posting Permissions

• You may not post new threads
• You may not post replies
• You may not post attachments
• You may not edit your posts
•
Aussie Stock Forums