Exposure & Construction

A measure of your portfolio's sensitivity to SPY's daily movements, estimated by regressing your returns against SPY's returns. A β of 1.0 means your portfolio tends to move in lockstep with the market; a β of 0.5 means it moves roughly half as much.

How to use it: Options portfolios — especially short premium strategies — often exhibit low or variable beta due to the non-linear nature of their payoff profiles. Understanding your beta is essential for interpreting your returns correctly: a portfolio that returned 15% in a year when SPY returned 25% looks different depending on whether its beta was 0.3 or 0.9. Low beta with positive alpha is the combination most active traders are targeting.

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