Long Calendar Profit/Loss Time Value of Far, Long Option Debit.
Using newer dates in these examples will not improve their illustrative value, but it would increase the amount of work that I would continually have.
Typically, exchange-traded option contracts expire according to a pre-determined calendar.February, s M, t W, t arch S April S May S June S July S August S September S October S November S December S Options Center » The stock picking alternative Never bought options?Of course, it doesn't have to be closed out, or it could, as it often is, closed out earlier, but this assumption simplifies the discussion and isolates the value of the calendar spread, because otherwise a naked option will be long or short after the.Note that the profit/loss profile will likely be better than this, because Apple reports earnings at the end of October.However the holder or the holder's broker may request that the options are not exercised automatically.The concept of time is at the heart of what gives options their value.Note that the profit potential is not as good as the long spread, but if Apple was expected to go if you want more sex women or men much higher or lower than 101, then this spread would at least earn a profit.However, the far option can be used as part of another spread instead of being offset, but then it is just another spread which can be analyzed just like the original spread.The profit for the close this week actually turned out much higher than the estimated maximum, but remember, it was only a very rough estimate.Use our comprehensive options screener and join discussion groups with other options traders.What is an 'Expiration Date (Derivatives.The maximum profit for a long calendar spread is usually earned when the underlying price equals the strike price at expiration of the near, short option.
Those that don't want to liable to fulfill contract must roll or close their positions on or before the last trading day.
However, when that Friday falls on a holiday, the expiration date is on the Thursday immediately before the third Friday.
Especially for out-of-the-money options, time value will be proportional to the amount of time remaining until expiration, since a longer time increases the probability that the option can finish in the money.
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