Calendar Spread
In plain English
A bet on time, not direction. You sell a near-expiry option and buy a far-expiry one at the same strike. The near one decays faster, so you profit from that difference if the price sits still.
How it's built
Sell a near-expiry option and buy a far-expiry option at the same strike — profit from faster near-term decay.
Illustrative payoff at expiry on a NIFTY-like underlying (spot 24,000, 7d, 13% IV). The shape is the point — open it in the Strategy Lab to tune spot, time and volatility live.
Max profit₹0
Max loss₹0
Net premiumCr ₹0
Breakevens—
When to use it
Neutral near term, expecting the front month to decay faster than the back month. Long vega.
Max profit
Maximised if the price sits at the strike at front-month expiry.
Max loss
Limited to the net debit paid.
Common mistakes
- Ignoring that a big move hurts both legs.
- Not accounting for term-structure shifts.