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Calendar Call Spread

 Profile Version / Simplified Version / Comprehensive Version


Purpose Of Calendar Call Spread
1. To Profit From Stagnant / Moderately Rising Stocks
2. Long Term Trading On A Single Stock


Expectations Of Calendar Call Spread
Stagnant and Moderate Up


Type Of Spread
Debit Spread


How To Use Calendar Call Spread?
Buy At The Money (ATM) LEAPS call options and then sell ATM near term calls against the LEAP call options.

Buy Long Term ATM Call + Sell Near Term ATM Call 		Calendar Call Spread Risk Graph Learn How To Read This Chart



Profit Potential of Calendar Call Spread :
A Horizontal Calendar Call Spread profits when the underlying asset closes at or slightly above the strike price of the short call options.

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Profit Calculation of Calendar Call Spread:
To be calculated using Black-Scholes Model.


Risk / Reward of Calendar Call Spread:
Upside Maximum Profit: Limited

Maximum Loss: Limited
(limited to net debit paid)


Break Even Point of Calendar Call Spread:
Break Even = Stock Price when long call value is equal to net debit

The long call value at different prices can only be calculated using the Black-Scholes model.


Advantages Of Calendar Call Spread:

  • Able to profit even if underlying asset stays stagnant.

  • Able to offset losses if underlying asset drops in value.

  • Buying the LEAP in lieu of the stock can generally allow the underlying asset to be controlled at a discount.

  • Losses are limited to the net debit.


    Disadvantages Of Calendar Call Spread:

  • Profits are limited even if the underlying asset rallies.

  • Losses can be sustained if the short call options are assigned when the underlying asset rallies.


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