For those of you familiar with credit spreads, I could use a little help. I can't seem to quite get my head around figuring profit and loss.
Do you base your figures on the amount of risk/collateral, or the total spread? I *think* if I look at it like investing in inventory, I'd base everything on what I put up. Example:
$100 spread
$32 credit
$68 risk
I closed it for $60 to mitigate some of the loss.
So if I was reselling, I would see this as having made $8 (~12%?) profit. Since credit spreads give you the money upfront however, I'm stuck. Did I loose 60% (Total - Close), 88% (Risk - Close), 53% (Credit - Close) or something else entirely?
Thanks!
Do you base your figures on the amount of risk/collateral, or the total spread? I *think* if I look at it like investing in inventory, I'd base everything on what I put up. Example:
$100 spread
$32 credit
$68 risk
I closed it for $60 to mitigate some of the loss.
So if I was reselling, I would see this as having made $8 (~12%?) profit. Since credit spreads give you the money upfront however, I'm stuck. Did I loose 60% (Total - Close), 88% (Risk - Close), 53% (Credit - Close) or something else entirely?
Thanks!
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