The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “What are absolute returns?” I think there's a lot of confusion out there when people talk about returns and performance and oftentimes, you'll hear people boast about their returns on a particular trade or even asset or portfolio and what they’re usually referring to is absolute returns. Absolute returns basically just look at the return or the appreciation expressed as a percentage over any given period of time. This could be over a year. It could be over two years. It could be over five years. For example, if somebody invested say $1,000 and over the course of five years, they made $300, then they would say, “Oh, I was up 30% on my investment.” But that’s over the course of five years. Did they make 30%? Sure, no doubt. No disputing the fact that they generated 30%, but over what timeline? Then you actually get more true representation of what maybe say like an annualized