Sell to open September 40 call.
Buy to open October 40 call.
My exit strategy is somewhat unique. The first thing to understand about a calendar spread is that the profit peaks at the common strike price. Higher than the strike price you start to give it back and lower than the strike price you start giving it back. To me this says the optimal place to exit is exactly at the strike price. I call this exit strategy my stop profit strategy. Remember it is based on the stock price and not the option prices. Using this exit strategy will also make it more likely that your trade will be profitable.
OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits
EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV