What is a calendar call spread?

A Calendar Call spread is an options strategy where two calls are traded on the same underlying and the same strike, one long and one short. The only thing that separates them is their expiry date. A long Calendar Call consists of selling a shorter-term call option and buying a longer-term call option, shown below.

What are the different types of long calendar spreads?

There are two types of long calendar spreads: call and put. There are inherent advantages to trading a put calendar over a call calendar, but both are readily acceptable trades. Whether a trader uses calls or puts depends on the sentiment of the underlying investment vehicle. If a trader is bullish, they would buy a calendar call spread.

What is double calendar spread & reverse calendar spread?

Double Calendar Spread – It involves buying future months’ call and put options and selling near-month calls and puts with the same strike price. Reverse Calendar Spread – It acts reversely, wherein the traders take an opposite position. They sell a longer-term option and buy a short-term option on the same underlying security.

Do long call calendar spreads require a debit at entry?

Long call calendar spreads will require paying a debit at entry. The initial cost is the maximum risk for the trade if the short call option is in-the-money and/or both options are closed at the front-month expiration.