Calendar Spreads

Calendar Spreads

An options or futures spread established by simultaneously entering a long and short position on the same underlying asset but with different delivery months. Sometimes referred to as an interdelivery, intramarket, time or horizontal spread.

An example of a calendar spread would be going long on a crude oil futures contract with delivery next month and going short on a crude oil futures contract whose delivery is in six months.

Source: http://www.investopedia.com/terms/c/calendarspread.asp

The following image is an example of a Calendar Spread Calculator

calendar_spread_calculator

Source: Charts created by Bloomberg LP.  All rights reserved. Click here for more information on Bloomberg.

The following chart is an example of a Calendar Spread Profit Loss Graph

calender_spread_profit_loss_graph

Source: Charts created by Bloomberg LP.  All rights reserved. Click here for more information on Bloomberg.