Options Strategies
Long Call Calendar Spread
Strategies Long Call Calendar Spread
Component Buy distant maturity call, sell nearby maturity call of the same strike price/level
Potential Profit
  • When the stock price/index level is at the strike price/level on the nearby expiry date
  • Limited to the time decay on the nearby call minus the time decay on the distant call
Maximum Loss Limited to net premium paid
Time Value Impact Positive
Remarks The features of Long Call Calendar Spread and Long Put Calendar Spread are quite similar. The major difference falls on the amount of net premium paid, depending on the strike price/level of the contracts chosen. Margin may be required. The short position might be assigned at any time before expiry.
Example
  Net Position +1 Mar 200 Call -1 Jan 200 Call

Component Buy ABC Mar $200 Call, pay $30, and sell ABC Jan $200 Call, receive $20
Net Premium Pay $30-$20=$10
Profit when Maximum when the stock price is $200 on the nearby expiry date
Potential Profit Time decay (Jan call) - time decay (Mar call)
Potential Loss $10
Time Value Impact Positive

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