Calendar Call Return
The calendar call spread (see calendar spread) is a bullish strategy and consists of selling a put option with a shorter expiration against a purchased call option with an expiration further out in time. The calendar call spread is basically a leveraged version of the covered call (see above), but purchasing long call options instead of purchasing stock.
% Assigned Return = (long call value - net debit) / (net debit)
% Unchanged Return = / (net debit)
For example, consider stock OPQ at $49.31 per share. Buy JAN 1 Year Out 40 strike call for $13.70 and write (Sell) the Near Month 55 strike call for $0.80
Net debit = $13.70 - $0.80 = $12.90
% Assigned Return = (17.90 - 12.90) / (13.70 - 0.80) = 5.00 / 12.90 = 38.8%
% Unchanged Return = / 12.90 = .68 / 12.90 = 1.0%
Read more about this topic: Stock Option Return
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