What is premium yield in options?

Premium yield is the return you earn on the capital you lock up for an options trade. Formula: (premium received ÷ collateral) × 100. For a $45 strike put with $0.85 premium, collateral is $4,500 and yield is 1.89%.

How do I annualize options yield?

Multiply the yield by (365 ÷ days to expiration). A 1.89% yield over 30 days annualizes to roughly 23%, letting you compare options with different expirations.

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