Realized Returns

Realized returns represent the actual profit or loss generated from an investment once it has been sold or closed. Unlike unrealized gains or losses, which exist only on paper while an asset is still held, realized returns are finalized when a transaction is completed.

In the context of cryptocurrency and financial derivatives, this is the amount of cash or stablecoin equivalent that enters or leaves a wallet after accounting for all fees and slippage. These returns are critical for tax reporting and performance evaluation.

Investors track these to determine the effectiveness of their trading strategies over specific periods. Realized returns essentially confirm the outcome of a completed market cycle for a specific position.

They reflect the net result of price appreciation or depreciation relative to the entry cost. For derivatives like options, realized returns include the impact of premiums paid or received at expiration or early closure.

This metric provides a concrete measure of capital growth or erosion. It is the fundamental basis for calculating an investor's true net worth change over time.