In this Face2Face video, our speaker Mr. Raghunath Reddy will continue from the previous part and talk about the calendar spread strategy in options trading. This will be a part of the options trading adjustments that will be simplified through this video. The Live demonstration will be done through Opstra in this video, providing more clarity to all the viewers.
Further in this video, Mr. Reddy will focus on the Calendar Spread for options trading. The calendar spread is a futures strategy or an option that involves taking a long and short position on the same underlying asset with different delivery dates simultaneously. A typical calendar spread would include purchasing a longer-term contract and selling a shorter-term option with the same strike price. Traders looking for some strategic information can watch the full video for deep knowledge, which will be beneficial during a Live market.
Next, he will explain the calendar strategy and how to implement it with a practical example, where he'll also share why he prefers the put calendar strategy over the call calendar strategy. He will next go into how the price difference between the two options at expiry generates the payoff in a calendar spread strategy. Since the maximum loss is restricted to the initial investment or the price differential between the two options, this technique is considered risk-defined. Determining the break-even point is challenging since it might be difficult to forecast the precise direction of price movement.
Watch the full video for a fruitful learning experience, and share it with other traders to get more opinions on this strategy.