Bull Calendar Spread Option Strategy
When a trader is bullish on the underlying stock/index in the near run, say 2-3 months, this strategy is used. A trader will write one Near Month out-of-the-money (OTM) Call Option and buy one Next Month out-of-the-money (OTM) Call Option, lowering the cost of going long pn the same underlying asset with the different call strike.
The investor/trader employing this strategy is long-term optimistic and is selling near-month calls in order to trade the next / far month call option for free.
When a trader wishes to benefit from a steady rise in the stock price over a short period of time, this strategy is used.
Sell 1 Near-Month OTM Call Option
Buy 1 Mid-Month OTM Call Option
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Also read: Protective Put Option Strategy