Back To Main | Back To Previous

Calendar Put Spread

 Profile Version / Simplified Version / Comprehensive Version


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


Expectations Of Calendar Put Spread
Stagnant and Moderate Down


Type Of Spread
Debit Spread


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

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



Profit Potential of Calendar Put Spread :
A Calendar Put Spread profits when the underlying asset closes at or slightly below the strike price of the short Put options.

explosive option trading mentor Personal Option Trading Mentor
Find Out How My Students Make Over 87% Profit Monthly,
Confidently, Trading Options In The US Market!

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


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

Maximum Loss: Limited
(limited to net debit paid)


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

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


Advantages Of Calendar Put Spread:

  • Able to profit even if underlying asset stays stagnant.

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

  • If an investor purchases the Long Put several months out in time, near term Puts can be written several times before the Long Put expiration. Therefore, the cost of the Long Put can be greatly reduced with many writes.

  • Losses are limited to the net debit.


    Disadvantages Of Calendar Put Spread:

  • Profits are limited even if the underlying asset rallies.

  • Losses can be sustained if the short Put options are assigned when the underlying asset drops quickly.


    Recommended!Trade Calendar Put Spreads With Best Options Broker, OptionsXpress!




    cool feature! Don't Know If This Is The Right Option Strategy For You? Try our Option Strategy Selector!





    Continue your journey of discovery...
    Click Me For Content Index
    Click Above For Content Index

    Questions? | Suggestions?
    What Is Bear Put Spread?
    What Is Bear Ratio Spread?
    What Is Short Bear Ratio Spread?
    What Is Buy Put Options?
    What Is Naked Call Write?
    What Are Debit Spreads?
    What Are LEAP Options?
    What Is Bear Call Spread?
    What Is Black-Scholes Model?
    What Are Option Greeks?
    Back To Strategies Page
    Stock Options
    Options Trading

    Back To Main | Go To Option Trader's HQ

     

    • Javascript Tree Menu

    Keep in touch with our updates through RSS...NOW! Follow www.Optiontradingpedia.com on Twitter

    Our Sponsors

    Important Disclaimer: Options involve risk and are not suitable for all investors. Data and information is provided for informational purposes only, and is not intended for trading purposes. Neither www.optiontradingpedia.com, mastersoequity.com nor any of its data or content providers shall be liable for any errors, omissions, or delays in the content, or for any actions taken in reliance thereon. Data is deemed accurate but is not warranted or guaranteed. optiontradinpedia.com and mastersoequity.com are not a registered broker-dealer and does not endorse or recommend the services of any brokerage company. The brokerage company you select is solely responsible for its services to you. By accessing, viewing, or using this site in any way, you agree to be bound by the above conditions and disclaimers found on this site.

    Copyright Warning: All contents and information presented here in www.optiontradingpedia.com are property of www.Optiontradingpedia.com and are not to be copied, redistributed or downloaded in any ways unless in accordance with our quoting policy. We have a comprehensive system to detect plagiarism and will take legal action against any individuals, websites or companies involved. We Take Our Copyright VERY Seriously!