Calendar spread

Calendar spread is the name of an options strategy involving the simultaneous purchase and sale of options of the same class and strike price but with different expiration dates. Also known as time spread or horizontal spread.
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Applies to derivative products. Bull spread in which there is a simultaneous purchase and sale of options of the same class at different strike prices, but with the same expiration date.

The sale of an option with a nearby expiration against the purchase of an option with the same strike price, but a more distant expiration. The loss is limited to the net premium paid, while the maximum profit possible depends on the time value of the distant option when the nearby expires. The strategy takes advantage of time value differentials during periods of relatively flat prices.