Definition
A calendar spread, also called a horizontal or time spread, involves buying and selling options with the same strike price but different expirations. Typically, you sell the near-term option and buy the longer-term option. It profits from time decay differences and volatility changes.
Example
Sell a March $100 call and buy a June $100 call. Profit if the stock stays near $100 as the March option decays faster.
FAQ
What is Calendar Spread?
An options spread using same strike but different expiration dates.
Why is Calendar Spread important?
Calendar Spread helps investors evaluate options and make more informed decisions.