Real Example (July 2025)
A long put calendar spread involves buying a longer-term put and selling a shorter-term put at the same strike price. It's effective when expecting neutral to slightly bearish short-term movement, with increased volatility later.
- Stock: XYZ Corp
- Outlook: Neutral short-term, bearish long-term
- Setup: Buy 1 XYZ $100 Put (Oct) @ $5.20; Sell 1 XYZ $100 Put (Aug) @ $2.30
- Net Debit: $2.90 ($290 per contract)
- Max Loss: $290
- Max Gain: Varies depending on timing and volatility
- Ideal Stock Price at Aug Expiration: Around $100