initially a double calendar spread or a "time" spread is a spread commonly taking part in volatility going up in the foreseeable future or the stock remain tranquil close to the vicinity of stock price. The trader is builds a trade by selling a closer expiring At-the-money option while buying a further At-the-money option Whether buying puts or calls, you have to make sure the strike price you decide to sell and decide to buy have the same strike price.
In order to catch the stock before a crazy month, the trader needs to buy the trade at 25-30 days before earnings release. You want volatility to go up, basically rise as an earnings event is coming up.
AMZN
This was a put credit I made in week 33, 2018. I’m curious to see my win percentage and see if it’s something I should visit later on in the future. Trade was opened in August, and it started to make money quick. The stock seemed to be doing the normal pattern of the market at the time, making higher-lows, and continuing up. I wanted to trade in this position due to the pricing being good for the credit spread, taking in a credit of almost $.$0.70 Luckily, AFTER I closed my position, amazon hit its top for the year and slid down.