Are divisions of returns linear?
If I have an annualized 5% return on ,000, which is 0, can I always say that each 1% is ?
If that is the case, then this linear division of an annualized returns can be applied to more complex scenarios. For example, you buy an option requiring 0 and hold it for 60 days, netting . That's 6% on the holding period and 36% (12/2 x .06) annualized. Each annualized 6% in that case is right?
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Common calculations include gross return, net return, percent return, annualized return and if you want, compound return.
How is a 6% return on an option that cost 0 a more complex scenario than earning 0 on ,000? Yield is yield.
If you want to do " linear division of an annualized returns", go for it. If you do, what edge does that give you in your investing/trading?
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