Paid DailyPDPaid Daily
Open the desk
tastylive

Dr. Jim Schultz Says Most People Put Calendar Spreads on the Wrong Stocks

NowPress play to follow along0:00 / 10:13
Chapters6 segments · tap to seek
ticker lesson

Breakdown

0:00lesson

Calendar spreads basics

  • Calendar spreads are popular
  • Profit objective is 50% of max profit
  • Calendar spreads have lower profit targets
  • Profit targets are 10-25% of debit paid
1:56lesson

Choosing stocks for calendar spreads

  • Higher price stocks have higher basis
  • Higher basis makes trade more significant
  • Avoid low-priced stocks for calendar spreads
3:46lesson

Setting up a calendar spread

  • 2:1 ratio between DTE in back and front month
  • Buy back month, sell front month
  • Profit is time decay and volatility expansion
5:34lesson

Maximum loss and risk management

  • Maximum loss is the cost of the calendar spread
  • Avoid low-cost calendars if you want to make money
  • Risk is low but reward is also low
7:25lesson

Vega differential in calendar spreads

  • Long back month, short front month
  • Vega is higher for longer-term options
  • Volatility expansion benefits long options
9:11lesson

Low-cost calendar spreads

  • Low-cost calendars have low max loss
  • But low reward potential
  • Avoid low-cost calendars if you want to make money

Informational only — this is tastylive’s content, decoded by Plutus. Not Paid Daily’s advice or a recommendation. The outline, timestamps, and claims are extracted from what the creator said; verify before acting.