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:: Step 1: Cost Per Spread
Sp 1:  $1.15 - $0.25 = $0.90
Sp 2:  $2.10 - $0.50 = $1.60
Sp 3:  $3.20 - $0.60 = $2.60
Sp 4:  $2.95 - $0.30 = $2.65
Sp 5:  $1.10 - $0.20 = $0.90
Sp 6:  $1.50 - $0.80 = $0.70
 
:: Step 2: Number of Spreads
Sp 1: $1,000 / ($0.90 x 100) = 11
Sp 2: $1,000 / ($1.60 x 100) = 6
Sp 3: $1,000 / ($2.60 x 100) = 3
Sp 4: $1,000 / ($2.65 x 100) = 3
Sp 5: $1,000 / ($0.90 x 100) = 11
Sp 6: $1,000 / ($0.70 x 100) = 14
 
:: Step 3: Outlay Per Spread
Sp 1:  $90.00 x 11 = $990.00
Sp 2:  $160.00 x 6 = $960.00
Sp 3:  $260.00 x 3 = $780.00
Sp 4:  $265.00 x 3 = $795.00
Sp 5:  $90.00 x 11 = $990.00
Sp 6:  $70.00 x 14 = $980.00
 
:: Step 4: Exit Price
Sp 1:  $1.40 - $0.20 = $1.20
Sp 2:  $2.40 - $0.20 = $2.20
Sp 3:  $3.30 - $0.25 = $3.05
Sp 4:  $1.60 - $0.55 = $1.05
Sp 5:  $0.85 - 0.30 = $0.55
Sp 6:  $2.00 - $0.60 = $1.40
 
:: Step 5: % Profit/Loss
Sp 1:  (1.20-0.90) / 0.90 = 33.3%
Sp 2:  (2.20-1.60) / 1.60 = 37.5%
Sp 3:  (3.05-2.60) / 2.60 = 17.3%
Sp 4:  (1.05-2.65) / 2.65 = 60.4%
Sp 5:  (0.55-0.90) / 0.90 = 38.9%
Sp 6:  (1.40-0.70) / 0.70 = 100%
 
:: Step 6: Gross Profit/Loss
Sp 1:  $990 x 33.3% = $329.67
Sp 2:  $960 x 37.5% = $360.00
Sp 3:  $780 x 17.3% = $134.94
Sp 4:  $795 x 60.4% = $480.18
Sp 5:  $990 x 38.9% = $385.11
Sp 6:  $980 x 100.0% = $980.00
Total   $939.32
 
:: Step 7: Net Profit/Loss
Gross Profit: $939.32
Brokerage: $395.40
Subscription Fee: $105.00
Net Profit: $438.92
 
:: Step 8: ROI
Net Profit: $438.92
Bank: $10,000
ROI: 4.4%
 

Debit Spreads
 

To calculate the ROI on a debit spread, you will need to know:

  1. The entry prices of the long options

  2. The exit prices of the long options

  3. The entry prices of the short options

  4. The exit prices of the short options

  5. The dates when the trades were initiated

As an example, suppose you had subscribed to a service that offered recommendations on debit spreads and you had $10,000 to invest and were willing to risk 10% (or $1,000) per trade. The trades for the month, being a combination of Bull Call and Bear Put Spreads, were:
 
Stock Entry Entry (L) Entry (S) Option Exit (L) Exit (S)
EDS Jun-09 $1.15 $0.25 Jul 20 C / Jul 22.5 C $1.40 $0.20
SGP Jun-20 $2.10 $0.50 Jul 20 P / Jul 17.5 P $2.40 $0.20
FOSL Jun-15 $3.20 $0.60 Jul 22.5 C / Jul 25 C $3.30 $0.25
ELON Jun-17 $2.95 $0.30 Jul 7.5 P / Jul 5 P $1.60 $0.55
TOO Jun-23 $1.10 $0.20 Jul 25 P / Jul 20 P $0.85 $0.30
PEET Jun-29 $1.50 $0.80 Jul 35 C / Jul 40 C $2.00 $0.60
 
:: Step 1: Cost Per Spread
The first step in calculating the monthly ROI for these debit spreads is to work out the actual cost of entering them. This is done by subtracting the premium received from the sale of the short option from the cost of buying the long option, giving us a net cost per spread.
 
:: Step 2: Number of Spreads
Once we know how much each spread would have cost we can work out the number of spreads you would have bought. This is done by dividing your allocation per trade ($1,000) by the cost of each spread (which then has to be multiplied by 100 as it represents 100 shares of the underlying).
 
:: Step 3: Outlay Per Spread
Knowing the number of spreads we would have bought allows us to calculate your total outlay per trade, which is done by multiplying the number of spreads you would have bought (Step 2) by the amount you would have paid per spread (Step 1 x 100).
 
:: Step 4: Exit Price
Once we know how much you would have had outlaid for the spreads, we can begin to look at the actual profit or loss you would have made on them. The first step is to work out your net exit price, which is done by subtracting the exit price of the short option from the exit price of the long option.
 
:: Step 5: % Profit/Loss
With the net exit price of each spread established, we can now determine the gross percentage profit/loss on each one. This is done by subtracting the net cost of the spread (Step 1) from the net exit price (Step 4) and then dividing that figure by the net entry price.
 
:: Step 6: Gross Profit/Loss
Knowing the percentage profit/loss on each spread allows us to calculate your gross profit per trade, which is done by multiplying the percentage profit/loss (Step 5) by your outlay per spread (Step 3). This is shown in Step 6, along with your total gross profit/loss.
 
:: Step 7: Net Profit/Loss

Once we have your overall gross profit we can work out your net profit/loss, which is done by subtracting your costs (brokerage and monthly subscription fee) from your gross. The brokerage in this case will be 4 x $14.95 per spread for 9 or less contracts and 4 x $1.50 per contract for 10 spreads and above, based on you being charged brokerage for each leg into the trade and for each leg exiting it. This comes to a total of $395.40. The subscription we will set at the average, which is $105.00/month.
 
:: Step 8: ROI
Establishing your net profit allows us to calculate your ROI, which is done by dividing your net profit (Step 7) by your bank. This is shown in Step 8 and it gives you a return for the month of 4.4%.