What is a put calendar?

A put calendar is an options strategy that involves selling a near-term put contract and buying a second put with a longer-dated expiration. For example, an investor may buy a put option with 90 days or more until expiration, and simultaneously sell a put option with the same strike price that has 45 days or less until expiration.

What is a calendar put spread?

The calendar put spread is very similar to the calendar call spread, and both of these strategies aim to use the effects of time decay to profit from a security remaining stable in price. Whereas the calendar call spread uses calls, this strategy uses puts.

Should you trade a put calendar or a call calendar?

There are inherent advantages to trading a put calendar over a call calendar, but both are readily acceptable trades. Whether a trader uses calls or puts depends on the sentiment of the underlying investment vehicle. If a trader is bullish, they would buy a calendar call spread. If a trader is bearish, they would buy a calendar put spread.

What are the different types of long calendar spreads?

There are two types of long calendar spreads: call and put. There are inherent advantages to trading a put calendar over a call calendar, but both are readily acceptable trades. Whether a trader uses calls or puts depends on the sentiment of the underlying investment vehicle. If a trader is bullish, they would buy a calendar call spread.