Time Spread

A time spread, also known as a calendar spread, involves buying and selling options of the same type and strike price but with different expiration dates. This strategy allows a trader to profit from the difference in the rate of time decay between the two options.

The near-term option will decay faster than the long-term option, and if the underlying asset price remains relatively stable, the trader can profit from this decay. Time spreads are popular in crypto because they allow traders to manage their exposure to time decay while maintaining a position in the asset.

They are essentially a bet on the passage of time rather than the direction of the asset price. Traders must be aware of the potential for large price moves, which can negatively impact the spread.