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How Long Calendar Spreads Work (w/ Examples) | Options Trading Explained

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Long calendar spreads (a.k.a. 'time spreads' or 'horizontal spreads') can be very confusing to understand at first. In this video, you'll learn exactly how long calendar spreads profit by seeing P/L visualizations of historical calendar spread components. The long calendar spread is constructed by selling an option and buying another option of the same type and strike price but in different expiration cycles. When traders buy calendar spreads, they're anticipating the stock price to stay near the spread's strike price as time passes. If that happens, the spread's price will increase, but why? In this video, you'll learn exactly why long calendar spreads profit when the stock price hovers around the strike price as time passes. ------------------------------------------ Why Calendar Spreads Are NOT Long Volatility Trades: https://youtu.be/WZk1qcsa-nc Ultra-Competitive Commissions. Close Trades for Free.* $10 Commission-Cap Per Option Leg.** https://www.projectoption.com/tastyworks/ Our Options Trading Courses: https://www.projectoption.com/options-trading-courses/
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Text Comments (5)
projectoption (5 months ago)
Ultra-Competitive Commissions. Close Trades for Free.* $10 Commission-Cap Per Option Leg.** https://www.projectoption.com/tastyworks/
Mark Hoffman (5 months ago)
Solid presentation!
projectoption (5 months ago)
Thank you, Mark! I'm glad you liked it. -Chris
goldvest5 (5 months ago)
Wouldn't you also receive the money the $4.80 was left on the long call?
projectoption (5 months ago)
Yes, when you close out the calendar spread you will be buying back the short call (in this case, paying $1.56) and selling the long call (receiving $4.80). The net result is that you receive $3.24. With an initial purchase price of $2.25 the profit would be $0.99 on the spread ($99 in actual profits per calendar). I hope this helps! -Chris

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