Portfolio Value Calculation

[JerryT]

Is there a post or article that describes how the portfolio value number is calculated on the performance page? I must be missing something pretty basic: for the first trade of 2017, 1/17/17 SLB Straddle, I see a debit of  $2.20x5x100= $1,100 and a credit of $2.31x5x100= $1,155 for a cash difference of $55, but the portfolio value increased by $177. 

Thanks!

 

[Kim]

The total credit was 2.59 per spread (1.05+1.54). 

2.59/2.20=17.7% or $177 increase.

[greenspan76]

@TheJersus There were 2 SLB straddles traded within a few days of each other. You looked at the trade details on the second one. The first trade was a 17.7% gain 

 

 

[JerryT]

Indeed I did, but I'm still not quite there... on the first (17.7%) straddle I see cash going out of $2.20x5x100= $1100 and cash coming in of $2.59x5x100= $1295 for a difference of $195. Commissions?
 

 

 

[greenspan76]

5 minutes ago, TheJersus said:

Indeed I did, but I'm still not quite there... on the first (17.7%) straddle I see cash going out of $2.20x5x100= $1100 and cash coming in of $2.59x5x100= $1295 for a difference of $195. Commissions?
 

 

 

Yes, a $195 gain / $1100 capital requirement = 17.7%. If you look at the General Comments section just above the list of trades, you'll see this: 

• The returns exclude commissions since those vary between brokers.

 

 

[JerryT]

Right, $195. Then why does portfolio value increase by $177? Tried a few other trades with similar results, just trying to figure out what I'm doing wrong. My goal is to be able to calculate the performance of my trades in the same fashion as the official trades.

Thanks.

 

 

 

 

 

[Kim]

The portfolio value is always based on percentage P/L, not dollar P/L. The reason is simple: dollar P/L is based on invested capital which is not exactly $1,000. We cannot buy partial contracts, so we always buy "The number of contracts is per 10k portfolio and represents the closest number of contracts for 10% allocation." as mentioned in trade alerts. Sometimes we buy slightly more contracts than 1k, sometimes slightly less. On bigger accounts, it will be match more closely. For example, to fit 2.20 in 100k portfolio you would buy 45 contract, or 9900 debit, so dollar P/L will be pretty close to percentage P/L.

I hope it is clear now.

[JerryT]

Yes, thanks.