13 lines
822 B
Plaintext
13 lines
822 B
Plaintext
Calendar Spreads
|
|
Definition : A calendar spread, sometimes called a time spread or a
|
|
horizontal spread , is an option strategy that involves buying one option and
|
|
selling another option with the same strike price but with a different
|
|
expiration date.
|
|
At-expiration diagrams do a calendar-spread trader little good. Why? At
|
|
the expiration of the short-dated option, the trader is left with another option
|
|
that may have time value. To estimate what the position will be worth when
|
|
the short-term option expires, the value of the long-term option must be
|
|
analyzed using the greeks. This is true of the variants of the calendar—
|
|
double calendars, diagonals, and double diagonals—as well. This chapter
|
|
will show how to analyze strategies that involve options with different
|
|
expirations and discuss how and when to use them. |