📅

Calendar Spread

Neutral Strategy

Use Zuviz's free options visualizer to build this strategy instantly. Same strike, different expirations. Sell the near-term option and buy the longer-term option to profit from faster time decay on the short leg.

⚡ Key Takeaways

  • Market Outlook: Neutral with time advantage
  • Max Profit: Varies (occurs near strike at near-term expiration)
  • Max Loss: Net debit paid
  • Breakeven: Dynamic (complex calculation)
  • Best for: Exploiting time decay differential, IV expansion plays
  • Greeks Impact: Positive Theta on short leg, positive Vega on long leg

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Market Outlook
Neutral (at strike)
Max Profit
Depends on IV
Max Loss
Net Debit
Breakeven
N/A

📊 Payoff Diagram

Open in Zuviz →

🏗️ Strategy Structure

Leg Action Type Strike Expiration Premium
1 Sell Call $100 30 DTE $2.00
2 Buy Call $100 60 DTE $3.50

Net Debit: $3.50 - $2.00 = $1.50/share ($150/contract)

🧮 Key Calculations

🎯 When to Use This Strategy

  • Expecting sideways: Stock will stay near current price short-term
  • Theta play: Front-month Theta is higher than back-month
  • Low IV now, higher later: Expecting IV increase after front expiry
  • Event timing: Front expires before earnings, back expires after

📈 Greeks Impact

Delta (Δ)

Near Zero - You want the stock to stay still.

Theta (Θ)

Positive - Time decay is your best friend here.

Vega (ν)

Negative - You want volatility to decrease (IV Crush).

⚖️ Pros & Cons

Pros

  • Profits from time decay
  • Low cost
  • Can be adjusted

Cons

  • Exposure to volatility collapse
  • Slow moving
  • Capped profit

📝 Real-World Example

Stock: T at $20. Trade: Sell Monthly $20 Call, Buy LEAPS $20 Call.

Debit: $2.00. Goal: Short call expires worthless, keep long.

🔗 Related Strategies

📐 Diagonal Spread

Directional bias with time spread

🦋 Long Butterfly

Narrow range neutral play

Visualize This Strategy

See the payoff diagram in Zuviz.

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