Call Calendar Calculator

A call calendar sells a near-term call and buys a longer-dated call at the same strike. The trade costs a net debit, since the longer option is worth more. It profits if the stock is near the strike when the short call expires, because the short call then expires worthless while the long call keeps most of its time value.

When it is used

Calendars suit a view that a stock will go nowhere for a few weeks and that implied volatility is likely to rise, since a higher volatility raises the value of the long leg more than the short one. They are often placed at the current price before a quiet period, or at a strike the trader expects the stock to drift toward.

How it makes and loses money

Time decay works for the position while the stock stays near the strike: the short call decays faster than the long one. A large move in either direction hurts, because both calls move toward intrinsic value and the gap between them closes. A fall in implied volatility hurts, a rise helps. The maximum loss is the debit paid.

What to check in the grid

A calendar is one of the positions where the expiry columns tell only part of the story. Look at the column on the short call's expiry: the tent-shaped profit peaks at the strike and falls away on both sides. After that date the position is just a long call, and the grid shows that change.