Back to Glossary
OptionsC
Calendar Spread
An options strategy involving selling a near-term option and buying a longer-term option at the same strike price. Profits from time decay differential, as the near-term option loses value faster than the longer-term option. Calendar spreads are popular in low-volatility environments and can be constructed with either calls or puts.
Example
“He entered a calendar spread on SPY, selling the weekly 450 call and buying the monthly 450 call to capitalize on theta decay.”