Analysis

Max Drawdown

By Ryan Silk & Lawrence Polatchek · Reviewed April 2026 · Options Trading Glossary

Largest peak-to-trough portfolio decline

What is Max Drawdown?

Max Drawdown The largest peak-to-trough decline in portfolio value over a specific period. Expressed as a percentage from the highest point to the lowest point before a new high is reached. Max drawdown is critical for evaluating options strategies because it shows the worst-case experienced loss, which can be psychologically and financially devastating.

Complete Definition

The largest peak-to-trough decline in portfolio value over a specific period. Expressed as a percentage from the highest point to the lowest point before a new high is reached. Max drawdown is critical for evaluating options strategies because it shows the worst-case experienced loss, which can be psychologically and financially devastating.

Example

Your portfolio peaked at $100,000 and dropped to $70,000 before recovering. Max drawdown = 30%.

Related Terms

Value At Risk Tail Risk Risk Reward Ratio

Written by

ApexVol Research Team

Quantitative options research

All calculations use live ORATS institutional data — the same source used by professional volatility desks.

Technical reviewer

Ryan Silk, ApexVol Founder

Reviewed for technical accuracy

10+ years trading options. Built ApexVol's pricing engine, Greeks model, and IV-rank methodology.

This guide is updated as market conditions and ORATS data change. Last revised 2026-05-12. How we research →

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