Calendar Spread

A calendar spread combines two options at the same strike but two different expiration dates — one sold, one bought — to profit from the difference in how quickly each one loses time value.

Key Facts

Market Outlook: Neutral in the short term — benefits if the underlying stays near the strike until the near-term expiration. A rise in implied volatility generally helps the position; a fall generally hurts it.
Construction: Sell a near-dated option and buy a farther-dated option of the same type (both calls or both puts) at the same strike. Opened for a net debit.
Max Profit: No fixed formula. The best result usually comes when the underlying is at or near the strike at the near-term expiration. Its size depends on how much value the farther-dated option still has then, which depends on implied volatility, time remaining and interest rates.
Max Loss: For a call calendar, the loss cannot exceed the net debit if the position is closed at the near-term expiration — the near-dated call expires and the farther-dated call, which still has time value, is sold — assuming no dividends and no early assignment. For a put calendar, this limit is not guaranteed.
Breakeven(s): No fixed formula. At the near-term expiration there are usually two, one below and one above the strike. There may be none if the farther-dated option's remaining value is too small to recover the debit. Where they fall depends on the same volatility and time assumptions.
At Expiration: When the near-dated option expires, it is worth only its intrinsic value, while the farther-dated option still has time value. The chart above estimates that remaining value with an option-pricing model, so its curve is an estimate, not a fixed payoff.

Per share, at expiration (at the near-term expiration for calendar and diagonal spreads). Assumes the position is held until then and ignores commissions, taxes, dividends and early assignment.

Illustrative — Valued at the Near Expiration

Calendar spread — the near-dated leg is at expiration; the farther-dated leg still holds time value, priced theoretically.

Illustrative example — not live market data.

Requires Two Expiration Dates

This structure only works with two different expiration dates, so it isn't a one-click preset in OptionLab today. Build it in Manual Market instead, where every leg gets its own expiration date. US and Israel market builders currently use one shared expiration for the whole position.

Related Strategies

Diagonal Spread →Iron Butterfly →See all strategies →

How It Works

A common calendar spread sells a near-dated option and buys a farther-dated option at the same strike — though the same idea works in the other direction, or with puts instead of calls, depending on the outlook. At the near option's expiration, it settles at intrinsic value while the farther-dated option still has time remaining, so its value depends on where the underlying is trading relative to the shared strike.

This is not a one-click preset in OptionLab today — it's built by placing two legs with different expiration dates, which requires Manual Market (see the callout above).

Build a Calendar Spread in Manual Market

Add two option legs at the same strike, then give each one its own expiration date — one near, one farther out. OptionLab values the farther-dated leg theoretically and shows you the resulting payoff, breakeven points, and maximum profit and maximum loss.

Open Manual Market