Long OTM Put Calendar [Strategy Overview]

• Strategy: Sell OTM 30 days put options contract + Buy OTM further month to expire put options contract (ratio of 1 to 1)

• Number of legs: 2

• Market Prognosis = Bearish (Down-Market)

• Implied Volatility = In the low 20% of the last one year for the long leg.

This requires specialist software such as Optionetics Platinum.

• Expiration Month = 30days to expire

• Cost = Risk = Max Loss = Premium paid for the OTM put calendar spread = premium paid for long leg + premium received for short leg

• Max Profit = not fixed and changed with IV fluctuation and best calculated by software such as Optionetics Platinum

• Downside Breakeven Point #1 and #2 = not fixed and best formulated by software such as Optionetics Platinum

• Margin = None

• Advantage over Short Straight Call or Put, Spreads and Stock = Significant reduction in cost and big profit potential

• Disadvantage over Short Stock = Limited time to be right.

Tags: bearish, Calendar, Long, options, otm, put

Category: Calendar Spreads