# Return on Investment for rolled options position on margin [duplicate]

I'm trying to calculate my return on investment (ROI) for an options position on margin that has been rolled. I'll give an example:

1. Sell to Open (STO) a naked put position, for which I collect 100 premium, and the margin put up is 1000, for example. I have 1 contract.
2. Roll the position by Buying to Close (BTC) the short, which costs me 50, and then STO another naked put for 150, with a new margin requirement of 1750.

I know each transactional ROI:

1. STO 100/1000 = 10%
2. BTC 50/1000 = -5%
3. STO 150/1750 = 8.6%

My question is, what is the overall positional ROI, calculated from these transactional ROIs? How to weight each ROI?

Is it weighted according to the latest margin, so:

10.1000/1750 - 5.1000/1750 + 8.6.1750/1750 = 11.45%?

• Not as I understand it - to my mind I should be able to calculate an ROI from a knowledge of the transactional ROIs, no? – professorDante Jan 29 '19 at 5:41
• The problem is the way you define investment, the margin is not your investment. What happens if the margin change or you get margin called, you might end up with a ROI below -100%. That's also why ROI is a poor measure for long short portfolios (infinite ROI because net investment is 0). – Lliane Jan 29 '19 at 9:36
• I would think it is your investment, for all intents and purposes, as you cannot use that margin for anything else. We could call it 'return on margin' for more clarity perhaps – professorDante Jan 29 '19 at 18:01