Options Trading Tutorial

How to estimate beta of the portfolio that contains options and equity?

I have a portfolio with some stocks, 2 short put options (cash secured) and 1 short covered call. I would like to estimate beta for the portfolio. Should I ignore options? Should I take them into account with some probabilities? If so, how to calculate relative weight of each underlying stock - should I use strike or current price for this calculation? What to take as 100% - the current value of the portfolio or deduct the options value and add the newly calculated "what if" underlying stock value? Many thanks...

Public Comments

1. You should treat them as you would the stocks. So all you have to do is a regression fit of the returns of the whole portfolio with respect to the market. Do not calculate the betas of each stock/option separately. It is not necessary and would give the same results anyway.