Calendar Spread – An Option Trading Strategy.

Calendar Spread – An Option Trading Strategy.
We shall learn about the calendar spread options strategy in today's article. This strategy can be used in the futures too. A calendar spread is created by entering the short and long positions having different expiry dates.
In a calendar spread, traders can buy the contract for the long term and sell the contract in the near term, having the same strike price.
The calendar spread is sometimes called inter-delivery, intra-market, horizontal, or time spreads.

How to enter the Calendar spread:
To enter the calendar spread, traders will have to sell an option contract, which can be either call or put with the near-term expiry date, and purchase the long-term contract simultaneously; this can also be either call or put. Both of these contracts are of the same underlying asset and have the same strike price.
Sell near-term contract (call or put)
But long-term contract (call or put)
When you reverse the position mentioned above, meaning buying a short-term contract and selling a long term, it is called a reverse calendar spread.