Calendar spread
Sell a near-term option, buy a far-term option at the same strike. Profits from the near-term decaying faster than the far-term. Best when stock pins the strike at near-term expiry.
INPUTS
Underlying price
$
Centers the payoff chart and computes P&L at this price.
LEGS
Short near-term
Type
Side
Strike
$
Qty
Premium
$
Long far-term
Type
Side
Strike
$
Qty
Premium
$
RESULT
$60.001 strike$140.00
P&L at current spot (expiry)
−$150
Net debit−$150
Max profitUnlimited
Max loss−$150
Breakeven$100.00
Note: Max profit varies — depends on IV and time decay; peak when near-term expires ATM.
RISK PROFILE
Max profit
Variable — depends on IV and time decay
Max loss
Net debit paid
Breakeven
Approximated near the strike at near-term expiry
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