3D tracking plays a vital role in various engineering disciplines involving motion analysis in industry and academia, and a significant area of research is developing low-cost, accurate tracking sensors. Certain engineering applications like robotics, navigation, biomechanics and virtual reality often require real-time position/attitude tracking. Motion tracking system do exist in market for quite some time but high cost remains an obstacle in widespread use of such system. The presented LOSA tracking system combines inertial and optical tracking without relying on magnetometer data which is susceptible to stray magnetic noise and provides more reliable position and attitude estimates. Furthermore, the system's total cost including components and fabrication is less than $50 when manufactured in volume. The tracking system is relatively small, lightweight and low powered, making it suitable for wearable and/or mobile devices. The presented sensor when combined with other input/output devices offers significant potential for a range of applications such as mobile robot tracking, human computer interaction and virtual reality.