Free Option Trade: RUT Calendar Spread

Here’s a quick and easy option trade.

Buy Dec 590 Call, Sell Nov 590 Calls for a debit of 10.65 per spread.

If you do just one contract, it will cost you $1065 plus commissions. If RUT does not move much by Monday you should have over a 10% gain. Even if it moves about 8 points either way, you should still have close to a 10% gain.

This is a great trade to papertrade.

 

option trade

RUt Calendar Spread Graph

 

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Got something to share? Please feel free to leave your comments below.

4 Comments

  1. Larry Lockwood on December 3, 2009 at 2:10 pm

    I realize this is an old trade but I wanted to comment that when I trade calendars I have a hard time knowing when to bail out or just sit tight. What is the optiongenius bail out point for time spreads like this one?

    LL in Philly

  2. Genius on December 22, 2009 at 1:25 pm

    Normally, the easiest way to trade them is to adjust when they hit your breakeven. You can either take off the trade and reposition, or just double your size by adding a new calendar.

  3. Norm on November 21, 2011 at 12:03 am

    When entering a calendar spread, is it better to start with a single calendar and then add a second calendar if the stock price moves to the breakeven point….
    OR
    Start with a double calendar?

    • Genius on November 21, 2011 at 1:31 pm

      Depends on your trading plan. Sometimes I start with one to keep it simple if the underlying is right at a strike. Or if i dont have an opinion of which way the stock will move. If it is trading in the middle to two strikes I start with a double. And if you are really feeling adventurous you can also go for a triple calendar.

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