Calendar Spread Definition In Finance

A calendar spread is an options or futures spread established by simultaneously entering a long and short position on the same underlying asset at the same strike price but with different delivery.

Calendar spread definition in finance. Dgcx sees growth in gold and currencies. A calendar spread is a trading technique that involves the buying of a derivative of an asset in one month and selling a derivative of the same asset in another month. They are based on the same underlying market and strike price.

Futures trading is a very volatile activity as most prices are affected due to multiple external macroeconomic conditions that cannot be controlled. Calendar spread definition a calendar spread is a low risk directionally neutral options strategy that profits from the passage of time and or an increase in implied volatility. In finance a calendar spread also called a time spread or horizontal spread is a spread trade involving the simultaneous purchase of futures or options expiring on a particular date and the sale of the same instrument expiring on another date.

In options and futures trading the purchase of one contract and the sale of another contract that differs from the first only by its delivery or expiration date. If a call or put is sold with near term expiration it is called front month. If a call or put is bought with long term expiration it is called back month.

Calendar spreads also known as futures or intermonth calendar spreads are a set of futures trading strategies that utilises future contracts of different expiration months on the same underlying asset. A long calendar spread is a low risk directionally neutral strategy that profits from the passage of time and or an increase in implied volatility. Calendar spread definition a calendar spread is a low risk directionally neutral options strategy that profits from the passage of time and or an increase in implied volatility.

These individual purchases known as the legs of the spread vary only in expiration date.