Calendar Spread: Profit from faster time decay on near-term options vs. longer-dated ones
July 18, 2026
What is a Calendar Spread?
A Calendar Spread (also called a Time Spread) involves selling a near-term option and buying a longer-dated option at the same strike. You profit from the fact that the near-term option decays faster than the longer-dated one. Maximum profit if the stock is exactly at the strike when the near-term option expires.
Nifty at ₹22,000. You sell the current-week 22,000 CE for ₹80 and buy the next-month 22,000 CE for ₹140. Net debit: ₹60 × 75 = ₹4,500. If Nifty stays near 22,000 for the next week, the short Call decays rapidly toward zero while the long Call retains most of its value. You close both positions for a profit.
At a Glance
Max Profit
Near-expiry with stock at strike
Max Loss
Net Debit Paid
Breakeven
Approximately Strike ± Debit
Type
Debit · Time Spread
How to Set It Up
Action
Type
Strike
Expiry
Qty
Sell
Call/Put
Near-term expiry — same strike
7–14 DTE
1 Lot
Buy
Call/Put
Far-term expiry — same strike
30–45 DTE
1 Lot
P&L Simulator
Calendar Spread
📊 Calendar Spread — Payoff Chart + P&L Calculator
Index Price: 22000 · Strike Price: 22000 · Near-Term Premium Sold: 80 · Far-Term Premium Paid: 140 · Implied Volatility (%): 12 · Days Left on Far Option (at Near Expiry): 15 · Lot Size: 75 · Price at Exit – Near Expiry: 22000
When Should You Use This Strategy?
✓ When to Use / ✕ When to Avoid / ◉ IV / ◷ DTE
3 use items · 3 avoid items
#Time & Diagonal
Disclaimer
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