It is my understanding that opening larger stock positions will, if the stock climbs, produce a larger profit.
For example, if I open a position of $200 on the S&P 500 and that position goes up by 50% then my position will be in profit $100. Obviously, the opposite would be true if the stock goes down.
It then follows that if the position is $1000 and the stock goes up by 50% the position would be in profit by $500.
Is this correct?
The second part to this question is what does 50% mean?
Is the 50% relative to the size of the position (the number of units purchased) or something else? Is the profit incurred relative to the number of units (ie: $ amount) purchased?
I'm trying to understand the following:
Let's say I open a position while the S&P 500 is at 4400 and after a few hours or days I close the position when the S&P 500 is at 4500. This would be in profit. But, would I make twice the $ profit if I open the position with $400 than if I opened it with $200?
I've been looking for a calculator which allows me to enter simply the stock price at open and close and the $ amount at open to calculate the return amount, but have not found one yet.
To be more specific, with a real world example...
I open a position with $200 when the SPX500 is at 4377.46 and I close the position when the SPX500 reaches 4486.98. The index has risen by 109.52 points. I'm told that for the $200 investment this would be a % increase of 50% meaning a profit of $100. Is this correct?
According to the sums provided by @flux this would work out this way:
$200 / 4377.46 = 0.0456885956696349 4486.98 * ($200 / 4377.46) = $205.0038149977384
Obviously, I'm missing something here.