CHAPTER 11
Calendar and Diagonal Spreads
Option selling is a niche that attracts many retail and professional traders because it’s possible to profit from the passage of time. Calendar and diagonal spreads are practical strategies to limit risk while profiting from time. But these spreads are unique in many ways. In order to be successful with them, it is important to understand their subtle qualities.
Calendar Spreads
Definition: A calendar spread, sometimes called a time spread or a horizontal spread, is an option strategy that involves buying one option and selling another option with the same strike price but with a different expiration date.
At-expiration diagrams do a calendar-spread trader little good. Why? At the expiration of the short-dated ...
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