When Should You Use This Strategy?
Profit from time decay across expirations
Who Benefits Most?
Time-decay specialists
Position Setup
The Put Calendar Spread consists of the following legs:
- Buy 1100 strike put at $7 premium
- Sell 1100 strike put at $4 premium
How Profit and Loss Work
Maximum Profit: Limited: Time decay difference
Maximum Loss: Limited or unlimited per implementation
Break-even Points: Strike ± Net debit
Timing & Time Horizon
Roll 30–45 days continuously
Most traders enter this strategy 30–60 days before their expected move, allowing enough time for the position to develop while avoiding excessive time decay on shorter-dated options.
Capital Requirements
Modest net debit
How to Manage the Position
Roll short put monthly
- Monitor the position daily, especially as it approaches profitability
- Set clear profit targets and exit rules before entering
- Consider closing early to lock in gains rather than waiting for max profit
- Be prepared to cut losses if the thesis is wrong
Key Risks & What to Watch
- Active management required
- Varies by implementation
Model Before You Trade
Every strategy performs differently based on entry price, strike selection, and premium levels. Use the interactive Put Calendar Spread calculator to model the payoff with your expected entry, strikes, and premiums before committing capital.
Educational information only. This guide explains how the strategy works mathematically and typically behaves. It is not investment advice, and past performance does not guarantee future results. Options trading involves significant risk, including the potential loss of premium paid. Paper trade or use small positions while learning.