A Long Calendar Spread with Puts, also known as a horizontal put calendar spread or time spread, is an options trading strategy that involves buying and selling put options with the same strike price but different expiration dates. This strategy profits from the time decay of options.

Here's how the Long Calendar Spread with Puts works:

1. Strategy Setup:

   • Buy a longer-term put option with a later expiration date.
   • Simultaneously sell a shorter-term put option with an earlier expiration date.
   • Both options should have the same strike price.

2. Objective:

   • The goal is to take advantage of the time decay (theta) of the short-term option, which should decay faster than the longer-term option.
   • Ideally, you want the stock price to remain close to the strike price, as this maximizes the time decay of the short-term option.

3. Risk and Reward:

   • Limited risk: The most you can lose is the initial cost of establishing the spread.
   • Limited reward: The maximum profit is achieved if the stock price is near the strike price at the expiration of the short-term option.

4. Breakeven Points:

   • The strategy will be profitable if the stock price is near the strike price at the expiration of the short-term option.

5. Key Considerations:

   • Volatility: A rise in volatility can benefit the strategy.
   • Timing: The strategy works best when the implied volatility of the longer-term option is lower than the short-term option.

6. Management and Adjustments:

   • As expiration approaches, you may consider closing the entire position or rolling the short option to a later expiration if you believe the trend will continue.

7. Example:

   • Let's say you buy a put option with a strike price of $50 expiring in three months and simultaneously sell a put option with the same strike price of $50 expiring in one month.

   • If the stock price remains close to $50, the short-term put will lose value faster than the longer-term put, resulting in a profit for the overall position.

Remember that options trading involves risks, and it's important to fully understand the strategy and its potential outcomes before implementing it. It's also advisable to consult with a financial advisor or do thorough research based on your risk tolerance and investment goals.