Knowledge Base
Ranker Spread: Out of The Money (OTM) Call Calendar
Last Updated: September 2, 2022


Out of The Money (OTM) Call Calendar

How are Spreads used in the Brutus Ranker?

A spread type is used in every Brutus Options Ranker strategy in combination with a ticker group to narrow down the creation and evaluation of options trading opportunities to those most relevant to you.  This knowledge-base article gives you a preview of the Out of The Money (OTM) Call Calendar spread details, but the full details can only be viewed inside the app.
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Out Of The Money (Otm) Call Calendar Payoff Diagram

You create an out the money (OTM) call calendar spread setup by combining these two options:


  1. Selling (writing, going short) a near-term call out the money (where the strike price is above the current stock price) with a short expiration typically less than 30 days) and,
  2. purchasing (holding, long) a later-expiring call at the same strike price in step 1 above.  This position creates a net debit that you pay at trade entry.

When establishing an out the money (OTM) call calendar spread, the legs of the spread are created by zeroing in on a stock you believe is bullish.

The spread allows us to play the appreciation of the stock with a significantly reduced capital outlay. The position will benefit as time moves on so long as the underlying shares price moves closer to the strike price you selected.

Despite the fact that this position is a directional trade, It is a calendar or time spread all the same. This is because the strike prices of the short call (sold in the near term) and the long call (purchased at a later expiration) must be the same. The sale of the short-term call will partially offset the cost of the longer term call.

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View More in the Ranker App

This knowledge-base article is only a preview of the Out of The Money (OTM) Call Calendar spread.  View more in the Brutus Options Ranker App.  No registration required.
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