The April 13/April 21 calendar put spread on Apple (NASDAQ:AAPL) has a good expected return with limited risk.

When a calendar put spread is purchased, the maximum potential loss is the amount of the spread or debit paid to open the position. This is a limited-risk trade with good upside potential and positive expected return. The current price of Apple is $634.34. For this trade we are going to sell the April 13 $635 put for $10.45 and buy the April 21 $635 put for $14.90. The net debit is $4.45. If you're going to set your maximum risk at $1,000, which would be 1% of a hypothetical $100,000 trading account, you'd use two contracts. Actually, with two contracts the maximum possible loss would be $890.

The maximum gain on this trade is $606.54 and the expected profit is $571.94. This is assuming that the position is closed by the April 13 option expiration. The position will be essentially delta neutral at the onset of the trade; the delta of the April 13 $635 put is -51 and the delta of the April 21 $635 put is -50. Profit can be taken anytime the spread widens, but most traders will wait until April 13 at the expiration date of the short puts -- that's when the implied volatility, or IV, of the short put will collapse into expiration, and that's where traders should look to take profits.

Some traders will allow the stock to get put to them at the short strike price and then hold the married put position until the far expiration, with the same limited risk. If Apple is below $635 on April 13, you could let the stock get assigned to you and hold for a week with your long puts protecting the position, and your risk is still limited to the original $890. Your breakeven now will be at an Apple price of $643.90.

For those not familiar with expected profit, it is calculated by summing the multiples of the probabilities of the stock being at each price by the result of the position at that price. When trading options it is critical to evaluate your position in terms of expected return or expected profit, and only take trades when the probabilities are in your favor. Use an option calculator for each trade to compute the expected return. This trade on Apple has a very good probability of success with a defined risk. Correct position sizing is also important. In general terms, you shouldn't risk more than 1% of your portfolio on any given trade.

The profit and loss graph for this shows where the breakeven points are in visual terms.

*Click all images to enlarge.*

**Disclosure: **I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.