Calendar Spread Strategies

Calendar spread strategies involve simultaneously buying and selling options of the same type and strike price but with different expiration dates. The goal is to profit from the difference in the rate of time decay between the two options.

Typically, the trader sells the shorter-term option, which decays faster, and buys the longer-term option, which decays more slowly. This strategy is often used to express a view on volatility or the passage of time without taking a strong directional position on the underlying asset.

In crypto markets, calendar spreads can be particularly effective during periods of high uncertainty, as they allow traders to manage their exposure to the volatility term structure. The strategy requires careful monitoring of the implied volatility levels of both options, as a change in the volatility curve can impact the spread value significantly.

It is a foundational strategy for managing theta risk in a structured way.