What is the point of doing a Calendar Spread?

This thread is very helpful. I generally found calendar spread very difficult, not very profitable. But I often kind of legged into it because either I wanted to help partially pay for extrinsic premium of the long leg, or when a trade went bad to help limit the losses (for example a short call/put that went bad, buy a longer month to counter/limit the losses). Was I dumb doing that?

Appreciate any feedbacks.
 
In my head, the closer to the strike the underlying is without closing ITM the more profitable the spread will be and vise versa.
 
ironchef said:
This thread is very helpful. I generally found calendar spread very difficult, not very profitable. But I often kind of legged into it because either I wanted to help partially pay for extrinsic premium of the long leg, or when a trade went bad to help limit the losses (for example a short call/put that went bad, buy a longer month to counter/limit the losses). Was I dumb doing that?

Appreciate any feedbacks.
More...

The difficulty of legging is that one side is a relatively big exposure compared to the spread result. I believe you can add value, but you better have good scalping skills. I am the weakest link in the execution process, so I just try to get a reasonable fill on the spread in one trade.
 
RGLD said:
In my head, the closer to the strike the underlying is without closing ITM the more profitable the spread will be and vise versa.
More...

Given an equal distance, yes, because an ITM option can (will?) have a theoretical value that is less than intrinsic value.
 
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The big question is - Is this better than doing V-Spreads? I think that's the main reason a lot of people don't know about this. The Calendar seems overly complex and it doesn't offer a better risk/reward profile than a V-spread.

Although in my gut, I am certain this is a more conservative strategy.
 
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