Verified Trader Explains His Low-Risk, High-Reward Calendar Options Strategy

In this video, I'm going to show you an option strategy which has a 500% upside with a very limited downside risk. It is

a defined risk strategy where you can start with as little as $100. And in

this strategy, you earn theta premium.

So, every day you are in the trade, you are collecting premium. It is easy to trade and it is small account friendly.

You can start it with as little as $100 and scale it up as much you want. It has

low risk and a very high reward. I'm

going to show you one of my best performing option strategy. This

strategy is called the calendar spread.

This is the ultimate theta machine because it is very robust. With this

strategy, I can make bullish trades, bearish trades, neutral trades, and even omnidirectional trades. If you wait till

omnidirectional trades. If you wait till the end, I will show you exactly how I find the best setups, and I will show you how to execute this strategy effectively. I am on a mission to turn

effectively. I am on a mission to turn $100,000 into a million dollars using strategies like this. I started this account with $100,000 14 months ago and

now we are already up at $460,000 in just 14 months. So far, I've made about $360,000 profit in this account, which is $360%

return. This video is for education

return. This video is for education only. It's not financial advice. I am

only. It's not financial advice. I am

not a licensed financial adviser.

Options trading is highly risky and past results are not indicative of future performance. Do your own research or

performance. Do your own research or talk to your financial advisor. Last

month I made $58,000 profit in this account which was the best month ever.

And this month I've already broken the record of the last month. In just first two weeks it is up $71,000 in the last two weeks which is the biggest two weeks

for me in this account ever. You don't

have to take my word for it. Go and

check out my verified profit on my Kinfo profile. You can find it in the

profile. You can find it in the description below. Kinfo is a thirdparty

description below. Kinfo is a thirdparty platform which connects with my broker and verifies my performance and you can see my full track record on my Kinfo profile. Let's get into the mechanics

profile. Let's get into the mechanics and understand how this strategy works.

A calendar spread has two components. We

start by selling a short dated call or put option and then we hedge it by buying a longerdated option at the same strike. So in a typical trade, let's say

strike. So in a typical trade, let's say a stock is trading at $100. I can buy a $100 call and then sell a $100 call.

They will have the same strikes but different expiration dates. This

strategy is so robust that it can be used to create bullish trade, neutral trade or even bearish trade. It all

depends on which strikes we choose. The

way this strategy works is that when we sell an option with a shorter expiration date, it has a faster theta decay. And

then when we buy an option with a longer expiration date, it decays slowly because it has more time. So as a result, when the trade progresses through time, you will see that the gap

between both these options is going to increase. We start with a smaller gap

increase. We start with a smaller gap and then we end up with a bigger gap.

And this differential creates our edge.

This is where we make our profit. So as

we go through time, the gap increases.

You see that the profit starts to ramp up. This is why this is my favorite

up. This is why this is my favorite strategy. It's the ultimate theta

strategy. It's the ultimate theta machine. We can create a calendar spread

machine. We can create a calendar spread by either using call or put option. I

will show you both examples. But the

most important part in a calendar spread is on how we choose our strike prices and expiration dates. and I will walk you through my process because our peak

profit is going to be exactly at our strike prices. So when we choose our

strike prices. So when we choose our strike prices, we have to make a determination on where we think that the price can go. As long as it is near the ballpark in this range, we can make

profit. But our peak profit is at the

profit. But our peak profit is at the strike price we choose. So if we want to make a bullish trade, we are going to choose a strike price above the market.

If we want to make a bearish trade, then we will choose a strike price below the market. If you want to make a neutral

market. If you want to make a neutral trade, then we can choose a price which is at the market. Let's go through some examples to understand how to construct a trade like this. The first example is

for a neutral trade. SPY is currently trading at 748. So in this case, we are going to do a 748 call calendar. Now

because we are doing at the money at the current market price you can do either call calendar or put calendar. It's

going to be almost the same thing. There

can be a small difference in premiums but it is going to be the same trade. To

set up this trade I'm going to start by selling a 748 call with June 18 expiry which is 35 days away. And then I'm

going to buy a 748 call which is the exact same strike price but it is going to have a different expiration date which is going to be 1 week away from

the short date. So I'm selling it June 18 and I'm buying June 26. The total

cost for this trade is going to be just $140 and this is a defined risk trade.

That means no matter what happens in the market, my maximum loss is not going to be more than $140. which is why I consider it a low-risk strategy. But the

upside can be huge. In this trade, the maximum upside can be $534, which is 380% return on investment. That

means it has 3.8 riskreward. Let's go to the Mumu platform to set up and model this trade. So, I will search for SPY

this trade. So, I will search for SPY ticker and then I'll go to the options chain. In this dropdown, I can select my

chain. In this dropdown, I can select my choice of option strategy. Here we are going to trade calendar spread. So, I'm

going to select this option. Now it will automatically create calendar spread trades using two date combinations. So

in this case I want to select June 18 and June 26 combination. So I'm going to expand this and then it will show me pre-made calendar spread for different strike prices. In this trade I want to

strike prices. In this trade I want to go with 748 strike price. So I'm going to click the ask column on the left side to buy a 748 call calendar. If you want to buy a put calendar then you are going

to click the ask column on the right side. So, I'm going to click this ask

side. So, I'm going to click this ask button and it will automatically create a ready to go calendar spread trade for me. And then I can click the curve tab

me. And then I can click the curve tab here to see the profit and loss model.

Here you can see for this trade my max profit can be $530 and my max loss is just $139 and the peak profit will be at the $748 strike at expiration. But if

the price lands anywhere near this strike, I can still make a lot of profit. The break even range is between

profit. The break even range is between 732 to $768.

So it has a lot of flexibility. As long

as the price lands anywhere in this tent, my trade can make some profit.

Calendar spreads are positive Vega. That

means when the volatility starts to go up, you can see its profit tent is going to expand. So it will it can have higher

to expand. So it will it can have higher probability of profit. And also the max profit can also increase. You can see that as I increase the volatility

slider, max profit went from $530 to $730. But my max loss is still $1 139.

$730. But my max loss is still $1 139.

So it is best to enter a trade like this when the implied volatility is at the lower end of the spectrum and we expect it to go up during our trade duration.

And we can easily see how implied volatility moves using the Mumu app. So

I can just go here to the analysis tab.

And on the right side here you see volatility analysis. So I'm going to

volatility analysis. So I'm going to click and expand this window. So here we can see a pattern that the price and implied volatility often moves in the opposite direction. When the price goes

opposite direction. When the price goes up, implied volatility comes down and when the price goes down, implied volatility goes up. Now implied

volatility is a mean reverting product.

When it is like a rubber band when it goes up, it comes down. So we can see that looking at the last one year the median for implied volatility is somewhere in this area and right now we

are slightly below the median where we are at 17%. The lowest we have seen was back in December which was at 13. So I

can enter a trade like this when I is in the lower range of the spectrum but I'm not going to enter a trade when I is at the higher end of this spectrum. The

Mumu platform has a lot of tools like this for options traders which are not available in any other platform and it is also very easy to use. There are some commercial tools where you have to pay

hundreds of dollars for things like unusual activity charting and option strategy creator. You could be spending

strategy creator. You could be spending hundreds of dollars to buy different tools like this. All of those tools are included in the Mumu platform for free which is why it is one of my favorite options trading platform. The Mumu

platform offers all these powerful features, commissionfree options trading, and you can also get up to $1,000 in signup bonus when you sign up using the link in the description below.

This segment is sponsored by Mumu.

Usually, I don't do any sponsorships on my channel, but I've already been recommending Mumu to my friends and students because I really like this platform. So, when they reached out to

platform. So, when they reached out to me, it was a no-brainer to partner with them. Now, the next trade setup is a

them. Now, the next trade setup is a bullish call calendar. In this trade, I'm going to choose 775 strike. Why am I choosing 775 strike? Because it is based

on the expected move. The expected move is about $27. We can easily find the expected move using the Mumu platform.

So, I can go here back to the options chain. On the right side of the options

chain. On the right side of the options chain, you can see the implied volatility and the expected move numbers for all the different expiration dates.

So if I'm going to sell an option for June 18, I can see that the expected move for June 18 is plus or minus $27.

That means the market makers are expecting the stock to move up or down by $27. So if I'm going to make a

by $27. So if I'm going to make a bullish trade, my call calendar is going to be 27 points above the current price.

If I'm going to make a bearish trade, then my put calendar is going to be 27 points below the current price. To model

the next trade, I'm going to switch back to the calendar spread mode here and then scroll down to 775 strike and click on the buy order button. So, you can see

here that the max profit for this trade is $524 and max loss is $17, which means I can have up to 500% upside for this trade. And then I can go to curve to see

trade. And then I can go to curve to see the profit and loss curve for this trade. And here you can see that the

trade. And here you can see that the peak is at 775 strike. So if the price goes to 775 strike that is where we can make the max profit. Now in a calendar

spread the best case scenario is that we want the price to move to our strike price with a slow grind. But if the price moves to my strike price fast it is still going to be a very nice profit.

It can probably still make somewhere between 100 to 300% profit but it's not going to be 500. So to realize the maximum profit the price has to be at your strike by expiration. The next

trade setup is for a bearish trade which is a put calendar. This is 28 point below the market. In this case, the debit is going to be $123 which is also

the max loss. But the max profit can be $626 which is $510% return on risk.

There is another big advantage of a put calendar because when the market goes down, you can benefit from three ways.

One, you make profit from the directional move towards your strike.

Second, you are earning theta premium while you wait for the market to roll your way. And the third benefit is when

your way. And the third benefit is when the market goes down, implied volatility goes up, which means it is going to increase your profit potential and it will increase the chances of profit. So

I really love this kind of strategy when I want to hedge for downside protection.

Now let's take it to the next level. So

instead of just buying a call calendar here and a put calendar here, how about we combine both in a single trade and turn it into a strategy called the double calendar. This is my ultimate

double calendar. This is my ultimate strategy. With this strategy, I have

strategy. With this strategy, I have well over 80% win rate and this is my preferred way of trading calendars. If

you want to learn this strategy in depth, you can learn it in my coaching program. You can find details for it in

program. You can find details for it in the description below. In my coaching program, I teach you everything from the basics to the advanced level. So,

whatever I learned in the last five years of trading, you can learn all of that in just a few months. And I also give you my plug-andplay strategies with proven back test so that you can hit the

ground running fast. I also have a Discord community where I share my double calendar trade ideas. Over the

last couple of months, I have had close to 90% win rate on my double calendar trade. You can find details for both in

trade. You can find details for both in the description down below. Here is an example of a bullish call calendar trade. This is from a couple of weeks

trade. This is from a couple of weeks ago. 740 strike on SPY. And you can see

ago. 740 strike on SPY. And you can see that over the last couple of weeks, the price has slowly but surely gone to the 740 strike. And now this trade is at

740 strike. And now this trade is at more than 300% profit. The entry price for this trade was just $94 and its

current value is $397 which is 322% gain. Max profit was 322 and maximum

gain. Max profit was 322 and maximum loss was just $32. So you can see that it can have such a huge asymmetric riskreward profile which is why this is

one of my favorite strategy. Now when

you enter a trade like this you do not have to wait for the peak profit. If you

like if the trade makes 20 30% profit in a couple of days that is also a win. I

like to start taking profit early. I do

not like to wait till expiration. So if

I buy 10 contracts for a trade like this, I'm selling one contract here, one contract here, two more contracts here, three more contracts here. As the trade is going higher and higher, I keep

taking profit at different levels. Here

is another example of a delta neutral trade on Microsoft using the call calendar spread. This setup is from 2

calendar spread. This setup is from 2 weeks ago where we are selling a 405 strike call for June 15 and buying a 405 call for June 22. So you can see how

this trade performed over the last 2 weeks. The cost to enter this trade was

weeks. The cost to enter this trade was $151 and right now the value of this trade is $360 which means the total

profit is $29 which is 138% on risk.

Here you can see two charts. The chart

with the blue line below is the underlying spot price. You can see the trade started near 405 and it went up a little and then it came back down and

now it is kind of like where we started.

In the chart above with the green color, you can see the calendar profit and loss price. You can see it started at $151

price. You can see it started at $151 cost and then it slowly went up, then it came down, it goes up. Surely but

slowly, it's going higher and higher as the price settles near the strike price.

and it went up as high as 150% in just 2 weeks. Just like any trading strategy,

weeks. Just like any trading strategy, this strategy also has certain risk and it is very important to understand them.

The main risk of this strategy is that this is a rangebased strategy. If the

market moves against your direction, let's say if you have a call calendar, if the market goes down, then your trade is going to lose. If you have a put calendar and the market goes up, then your trade is going to lose again. Which

is why I like to do double calendar so I can make profit. So I can eliminate this directional risk. And the second risk is

directional risk. And the second risk is volatility crush. If you make this trade

volatility crush. If you make this trade at a time when the volatility is coming down or we have an event like earnings when volatility suddenly goes down, those kind of events can really hurt

this kind of trade. So you want to be very mindful that you are not getting in front of the streamroller. And the third is assignment risk. In this trade you have two different expiration. Your

front rated options are going to expire first. If they expire in the money, then

first. If they expire in the money, then you can be assigned on them, but then you can use your long call or put to cover and get out of that assignment,

but that can still turn a winning trade into a losing trade. So, you always want to make sure that you exit your trade before the expiration or if your option goes deep in the money, then there is

also a risk of early assignment. In that

case also, either you want to consider exiting or you can use your long option to cover the assignment. It's not a deal breakaker, but there can be instances where you can be taken by surprise with

a big margin call on your account, but you can settle that with your long call and put options. And you want to define your max loss before the trade entry. If

you are entering a single calendar, I personally would not use a stop-loss on that. So, I will enter with a smaller

that. So, I will enter with a smaller position. But with a double calendar, I

position. But with a double calendar, I have a wider range. And double calendar trades usually do not go to a full loss in most scenarios. So, in that case, I can take a bigger position because my

losses are going to be smaller there.

But I would still assume that there can be a one-off black swan events where any option trade can get wiped out. So, you

want to be mindful of your position sizing. Only risk what you are willing

sizing. Only risk what you are willing to lose. If you like this video and you

to lose. If you like this video and you want to learn more strategies like this, check out my option strategy playlist here. Don't forget to like and

here. Don't forget to like and subscribe. If you have any questions,

subscribe. If you have any questions, ask them in the comments. I will try my best to respond.