Articles on: Trades

Total Risk calculation

How do we calculate your total risk?

We taking in a list of trades.

We then calculate the total risk for each of those trades and if it has the potential to reduce the risk of another contract or stock position. We do this for every type of trade.

Total Risk simply is the calculation of:

Stock: Quantity of shares x price paid
Options BTO: Contracts x price paid
Options STO: Contracts x strike x 100

We then calculate how much risk can be negated by a position, the right to purchase, the obligation to sell. We do this for all combinations of trades.

In reality, the code that powers this is over 500 lines long and handles a very large number of variations.

Updated on: 26/03/2023

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