calendar spread

calendar spread
The purchase of one delivery month of a given futures contract and simultaneous sale of another delivery month of the same commodity on the same exchange. The purchase of either a call or put option and the simultaneous sale of the same type of option with typically the same strike price but with a different expiration month. Chicago Board of Trade glossary
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The sale of an option with a nearby expiration against the purchase of an option with the same strike price, but a more distant expiration. The loss is limited to the net premium paid, while the maximum profit possible depends on the time value of the distant option when the nearby expires. The strategy takes advantage of time value differentials during periods of relatively flat prices. The CENTER ONLINE Futures Glossary
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An option trading strategy that involves buying two calls or two puts on the same underlying, but with different maturity dates. If two call options are used, the spread may be referred to as a calendar call spread. Similarly, if two put options are used, the spread may be described as a calendar put spread. When the exercise price of the two options is the same, the calendar spread is described as a horizontal spread. When the exercise price of the two options is different, the calendar spread is described as a diagonal spread. American Banker Glossary
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Applies to derivative products. A strategy in which there is a simultaneous purchase and sale of options of the same class at the same strike prices, but with different expiration date. Bloomberg Financial Dictionary
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The selling (buying) of a nearby futures, options (put or call), or forward contract and the simultaneous buying ( selling) of a deferred futures or options contract with the same strike price. See futures calendar spread and options calendar spread. Chicago Mercantile Exchange Glossary
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Buying ( selling) the calendar spread involves the simultaneous purchase ( sale) of contract( s) in a near delivery month and the sale ( purchase) of an equal number of contract( s) in a far delivery month of the same futures contract. Exchange Handbook Glossary

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   ► See Horizontal Spread.

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calendar spread UK US noun [C]
► FINANCE, STOCK MARKET a situation in which an investor enters into option agreements to buy and sell financial assets of the same type and with the same price, but with different dates on which they must be paid for or sold

Financial and business terms. 2012.

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