Calendar Spread
Sell an option with a near expiry, buy the same option (same strike) with a later expiry. The short-dated option has higher theta — you profit from the faster time decay of the near option.
| Metric | Value |
|---|---|
| Max. Profit | When price = strike at near expiry |
| Max. Loss | −Net Debit × 100 |
| Optimal Movement | Price stays near strike until near expiry |
Double Calendar Spread
Two calendar spreads on different strikes (e.g. OTM call + OTM put). Wider profit zone than a simple calendar.
Diagonal Spread
Like a calendar spread, but strikes differ: buy further-OTM + later expiry, sell closer-OTM + near expiry. Combination of vertical and horizontal spread.
💡 Note: The P&L curves for calendar strategies are approximations — the actual P&L depends on the remaining time value of the long option, which cannot be calculated precisely without an options pricing model (Black-Scholes).
💡 sTraderZ.com recognises a Calendar Spread as same strike + different expiries. Diagonal Spread as different strikes + different expiries (↔️ Neutral).