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Languages: English | Bahasa Indonesia
Home | Blog | Define | Videos | Answers | Quiz | Download | Further Reading | Beginner Course | About | Contact |
Calendar Straddle: Summary / Profile Version / Simplified Version / Comprehensive Version |
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Purpose Of Calendar Straddle1. To Profit On Stagnant Stocks 2. To Set Up For Stocks Expecting To Breakout In A Few Months Expectations Of Calendar StraddleStagnant and Volatile Type Of SpreadDebit How To Use Calendar Straddle?Buy Long Term Straddle + Short Near Term Straddle
Profit Potential of Calendar Straddle :The maximum profit potential of a Calendar Straddle is attained when the underlying stock closes at the strike price of the near term straddle. In this respect, the profit potential of a Calendar Straddle is limited. Profit Calculation of Calendar Straddle:Maximum Profit = Difference in time decay between short term straddle and long term straddle. Specific prices needs to be calculated using an options pricing model such as the Black-Scholes Model. Risk / Reward of Calendar Straddle:Maximum Profit: Limited Maximum Loss: Limited Break Even Point of Calendar Straddle:Breakeven points of Calendar Straddle can only be determined through the use of an options pricing model such as the Black-Scholes Model. Advantages Of Calendar Straddle ::: Able to profit when stock remains stagnant for the short term :: Flexibility to transform the position into a long straddle when the stock is expected to stage a breakout. :: Loss is limited. :: No margin needed. Disadvantages Of Calendar Straddle ::: The position would result in a loss should the stock stage a breakout suddenly. :: There are 4 legs to this trade which may require legging into the position in order to ensure or enhance profitability.
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