iShares NASDAQ Biotechnology Index's (ETF) shares declined by 1.45% today, which is within one standard deviation of daily return for various time frames, according to my analysis:(Source: Google Finance. Calculations by author)On the other hand, the stock's three-day calendar spread is priced using a standard deviation of approximately 3.1% (divide the difference between break-even prices by the closing price of the ETF):(Source: optionsprofitcalculator.com)The "safety window" is over 6.2% for the next three days. This means that the stock has to move over 3.1% in either direction for the trader, who initiates this trade, to start losing money. Using the above standard deviations, the stock is expected to move by these amounts by Friday's expiration:(Source: Google Finance. Calculations by author)In three cases out of four, according to the above table, the stock is expected to stay within the defined boundary of the calendar spread, which has the following properties:(Source: optionsprofitcalculator.com)The calendar spread has a nice risk-reward ratio of 1.6:1 with a 6.2% "window of safety". On top of that, the spread is theoretically overpriced, which means that initiating a trade in the aforementioned manner is the rational action to take. I like the risk-reward ratio, I like the short duration of the trade, and I like the minimum size of the trade. Am I missing something? Because if not, I am doing it tomorrow!