This long LEAP position we are taking is the first part of a Diagonal Calendar Spread. Our goal is to wait for the stock to move higher as it is drawn to fill the gap. Once the stock has moved up we will then sell the near month, at-the-money calls to complete the spread. The risk is to the downside so it’s important for you to keep an eye on the price action. If the stock closes below 65 before we get a chance to sell the near month calls, then we will have to close out of the long leap position and move to cash.
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