Calendar Spread
Same strike, two expiries — a structure that earns from faster decay in the near month.
Definition
Calendar spread (also called a time or horizontal spread) combines two options of the same type and same strike but different expiries. The classic version sells a near-expiry option and buys a far-expiry option, paying a net debit. It profits when the underlying stays near the strike, because the short near-month leg loses time value faster than the long far-month leg.
Why it matters
A calendar spread is a way to monetise the steeper time decay of near-dated options while keeping defined risk — your maximum loss is the net debit paid. It also carries positive sensitivity to implied volatility, so a rise in IV typically helps the longer-dated leg. Traders use it when they expect the underlying to drift sideways before a later catalyst priced into the far month.
Example
With NIFTY at 24,000 you sell the current-week 24,000 call and buy the next-month 24,000 call for a net debit of, say, 90 points (illustrative). If NIFTY hovers near 24,000 into the weekly expiry, the short call decays quickly, the long call retains most of its value, and the spread gains.
See it live
Switch expiries on TradePulse's live option chain to compare near- and far-month premiums at one strike.