Bear Calendar Spread Puts, long-term

by herk_destro

Date/Strike Value Days to Expire price/days to expiry
6/19 @ 2800 15.60 20 0.78
7/17 @ 2800 41.50 48 0.86
8/21 @ 2800 72.20 83 0.87
9/18 @ 2800 93.50 111 0.84
10/16 @ 2800 112.10 139 0.81
11/20 @ 2800 138 174 0.79
12/18 @ 2800 153.1 202 0.76
1/15 @ 2800 162.5 230 0.71

As you can see, the price/days goes down significantly at 1/15/2021. Assuming market volatility is not too extreme and SPX stays about 2800 for the whole term, you could sell puts at 2800 every month or so and you should be able to get 0.80 to 1.0 price/day on those options.

Note: These values are representative on a weekend and the volatility in the market, the actual price of an option can easily jump up or down 10% to 20% depending on the day.

Caveats: The basis for selling at 2800 is assuming the market stays at that level consistently for the year. If SPX goes down, you should sell a lower strike option. If the market goes down pass your strike price, SERIOUSLY consider buying it, and selling your Long put. If the market tanks you can lose money if it goes down far enough fast enough.

Short-term Calendar spread at 2800, opcalc.com/8yj

Possible overall Outcomes,

Market(3200+): If the market goes up to 3400 and stays there, good news, bad news.

  • Bad news, you are going to come out a loser in your puts.
  • Good news, JPow has bought everything and then some and everyone will be working for the Feds and the banks. Everyone knows bankers make good money.

Market(3000 to 3200):

  • Bad news, you will probably go up a little or just break even.
  • Good news, everyone will be on UBI and you can gamble you new income stream on the stock market.

Market(2800 to 3000):

  • Bad news, You will not hit your strike price on your long option.
  • Good news, The world economy survived, and you will probably come out ahead.

Market (2800 or lower):

  • Bad news, Long bulls got screwed and there are no more cruise lines.
  • Good news, Your puts print and you collected premiums along to way.

 

Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.