OptionAutomator Options Trading Glossary:

Definition, Examples & Resources:Risk Free Return'

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What is Risk Free Return in Options Trading ?

Risk Free Return
The minimum expected return by an investor from risk free financial investments like treasury bills. This rate is considered when comparing alternate strategies and products to assess the incremental return potential associated with the additional risk in the position. This parameter is utilized in most option pricing models, including Black-Scholes in order to estimate the fair value of the option.




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