calendar-spread

The calendar spread is a neutral strategy: it profits if the stock remains range-bound. To create a calendar spread with calls, we write a call with a certain strike price (in my example, K = 20) and buy a call with the same exercise price but a LONGER maturity (in my example, we buy a call with...

Learning objectives: Explain the motivation to initiate a covered call or a protective put strategy. Describe the use and calculate the payoffs of various spread strategies. Questions: 727.1. Assume the current price of a stock is $30.00 and imagine that we can only trade the following four...