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:: Step 1: Size of Spread
Sp 1:  (70-65) x 100 = $500
Sp 2:  (110-100) x 100 = $1,000
Sp 3:  (75-65) x 100 = $1,000
Sp 4:  (75-70) x 100 = $500
Sp 5:  (25-20) x 100 = $500
Sp 6:  (80-75) x 100 = $500
 
:: Step 2: Margin
Sp 1: 500 - (1.75 x 100) = $325
Sp 2: 1,000 - (1.45 x 100) = $855
Sp 3: 1,000 - (1.30 x 100) = $870
Sp 4: 500 - (1.50 x 100) = $350
Sp 5: 500 - (1.25 x 100) = $375
Sp 6: 500 - (1.20 x 100) = $380
 
:: Step 3: Number of Spreads
Sp 1:  $1,000 / $325 = 3
Sp 2:  $1,000 / $855 = 1
Sp 3:  $1,000 / $870 = 1
Sp 4:  $1,000 / $350 = 3
Sp 5:  $1,000 / $375 = 3
Sp 6:  $1,000 / $380 = 3
 
:: Step 4: Outlay Per Spread
Sp 1:  $325 x 3 = $975.00
Sp 2:  $855 x 1 = $855.00
Sp 3:  $870 x 1 = $870.00
Sp 4:  $350 x 3 = $700.00
Sp 5:  $375 x 3 = $750.00
Sp 6:  $380 x 3 = $760.00
 
:: Step 5: Gross Profit/Loss
Sp 1:  $975 x 24.6% = $239.85
Sp 2:  $855 x 19.9% = $170.15
Sp 3:  $870 x 17.8% = $154.86
Sp 4:  $700 x  68.6% = $480.20
Sp 5:  $750 x 25.3% = $189.75
Sp 6:  $760 x 39.5% = $300.20
Total:   $335.51
 
:: Step 6: Net Profit/Loss
Gross Profit: $335.51
Brokerage: $179.40
Subscription Fee: $105.00
Net Profit: $51.11
 
:: Step 7: ROI
Net Profit: $51.11
Bank: $20,000
ROI: 0.3%
 

Credit Spreads
 

The information necessary to calculate the ROI for credit spreads is:

  1. The upper and lower strikes of each leg of each spread

  2. The credit received from each spread

  3. The dates the spreads were entered

In our example, we'll assume you subscribed to an advisor and were trading with a bank of $20,000 and a risk allocation of 5% (or $1,000) per trade. For the current month, your advisor lists their results as follows:
 
Stock Entry Sold Leg Bought Leg Credit Profit Return
CERN 16-Jul Sep 70 P Sep 65 P $1.75 $80.00 -24.6%
WFMI 18-Jul Sep 110 P Sep 100 P $1.45 $170.00 -19.9%
MDC 18-Jul Sep 75 P Sep 65 P $1.30 $155.00 17.8%
SIE 20-Jul Sep 75 P Sep 70 P $1.50 $240.00 68.6%
EENC 21-Jul Sep 25 P Sep 20 P $1.25 $95.00 -25.3%
HET 29-Jul Sep 80 P Sep 75 P $1.20 $150.00 39.5%
 
:: Step 1: Size of Spread
With this information, the first thing we would need to do to calculate your ROI is to work out the size of the spread for each trade. This is done, first by subtracting the upper strike from the lower strike and second, by multiplying that number by 100. The first part of this step gives us the difference between the two strikes in points. Each point, however, represents $100 in value, so by multiplying the difference by 100 we also convert those points to dollars.
 
:: Step 2: Margin
In order to calculate the margin requirements for each spread, we need to subtract the credit received from the amount in Step 1, after first multiplying that credit by 100. The margin, then, is the amount shown on the right hand side of the second calculation box.
 
:: Step 3: Number of Spreads
Knowing the margin for each spread allows us to determine how many spreads you would have entered. We do this by dividing your allocation per trade ($1,000) by the margin required for each spread then rounding that number down to the nearest whole number.
 
:: Step 4: Outlay Per Spread
Once we know how many spreads you would have entered we can work out your outlay for each spread, which is found by multiplying the margin from Step 2 by the number of spreads in Step 3.
 
:: Step 5: Gross Profit/Loss
Knowing the amount you outlaid for each spread lets us work out exactly how much money you would have made, which gives you your gross profit/loss.
 
:: Step 6: Net Profit/Loss
Now we can calculate your net profit/loss by subtracting the cost of your subscription plus your brokerage fees from your gross profit. Your brokerage for each spread will be $29.90 - that is, $14.95 for each leg. As the purpose of a credit spread is to have both legs expire worthless, we'll assume this happened, in which case no brokerage will be charged to exit them. And as with the Put/Call ROI calculations, we'll assume your subscription fee is about average, which is $105.00.
 
:: Step 7: ROI
Once your net profit has been calculated we can work out your ROI for the month. This is done by dividing your net profit by your bank, which is shown in Step 7. In this case, it works out to be 0.3%.