neutralPays debit

Call Calendar Spread

A call calendar sells a near-dated call and buys a longer-dated call at the same strike. The front option decays much faster than the back one — you're selling fast decay and owning slow decay, ideally at a strike the stock hovers near.

When it makes sense

You expect the stock to sit near the strike through the front expiration
The front month's IV is higher than the back month's (a positive IV differential)
You want positive theta with strictly limited risk

How it works

Sell a call expiring soon, buy a call at the same strike expiring later, for a net debit. The position is evaluated at the front expiration: max value lands with the stock at the strike, where the expired short call is worthless and the long call retains the most time value.

Risk & reward

Maximum loss: the debit, and only the debit — realized when the stock runs far from the strike in either direction. Maximum profit occurs at the strike but depends on where IV stands at the front expiry, so treat modeled max profit as an estimate. Positive theta and positive vega.

Worked example

Stock at $100. Sell the 14-day $100 call, buy the 45-day $100 call, for a $1.40 debit ($140). Stock at $100 in two weeks: short expires worthless and the long call might be worth $2.60 — roughly a $120 profit. Stock at $85 or $115: lose most of the $140.

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