What are Calendar Spreads?
One of the more common ways to maximize profits from trading ventures is to employ a process that is referred to as calendar spreads. Here is an overview of how calendar spreads are conducted, and why they can yield some big benefits. Essentially, calendar spreads are a method of buying and selling options on the same underlying security with an eye to reversing the process within an expressed period of time. The only difference is that the expiration date for options that are bought and the options that are sold is different. In most cases, the strike price will be the same in both transactions. There are different types of calendar spreads employed today. The time spread or horizontal spread actually uses a simultaneous sale model. That is, while the strike prices are the same and the expiration dates are different, the actual buying and selling is not stretched out over a month or several months. Both transactions occur at the same time. This sort of a calendar spread basically trad
