A calendar spread is an options strategy established by simultaneously entering a long and short position on the same underlying asset but with different delivery dates.
In a typical calendar spread, one would buy a longer-term contract and go short a nearer-term option with the same strike price. A calendar spread is most profitable when the underlying asset does not make any significant moves in either direction until after the near-month option expires. Thus taking advantage of the exponential time decay on the nearer month option contract.
The purpose of the trade is to profit from the passage of time and/or an increase in implied volatility in a directionally neutral strategy.
In this course you'll learn-
-The rationale, outlook, net position, effects of time decay, appropriate time to trade, selecting the stock, selecting the option, risk profile, advantages/ disadvantages, exiting the position etc. for a calendar spread.
-The steps in and out to be taken while creating a the time spread.
-How to execute a calendar spread with the correct technique.
- How to read the pay off chart correctly by using tools available online.
-How to adjust the trade when it goes against you.
-Live examples of trades on Indian stocks.
Looking forward to seeing you in this exciting journey and helping you achieve your financial dreams.