---
description: "A horizontal spread buying a longer-dated ATM call at TTM T' and selling a shorter-dated ATM call at the same strike K with TTM T < T', profiting from time decay when stock stays near K."
tags: [options, income, neutral, calendar-spread]
---

# Calendar Call Spread

**Section**: 2.18 | **Asset Class**: Options | **Type**: Income

## Overview
The calendar call spread (horizontal spread) consists of a long position in a near-ATM call option with TTM T' and a short position in a call option with the same strike K but shorter TTM T < T'. This is a net debit trade. The trader's outlook is neutral to bullish. The best case at expiration of the short call (t = T) is if the stock price is right at the strike (S_T = K), maximizing the remaining value V of the long call.

## Construction
- Buy 1 call option at strike K, TTM T' (longer expiry)
- Sell 1 call option at strike K, TTM T < T' (shorter expiry), same strike

Net debit: D

## Payoff Profile
At t = T (expiry of short call), let V = value of the long call (expiring at T') assuming S_T = K:

- P_max = V - D  (if S_T = K at short expiry)
- L_max = D  (net debit paid)

If S_stop-loss <= S_T <= K, the trader can roll by writing another call with strike K and TTM T1 < T'.

## Key Conditions / Signals
- Neutral to mildly bullish; expects stock to remain near K through T
- Low volatility environment after entry is ideal (long vega on net position)
- Best suited for income generation by repeatedly selling shorter-dated calls against the long call

## Notes
This strategy resembles the covered call strategy in structure. While maintaining the long call, the trader can generate income by periodically selling call options with shorter maturities. The stop-loss price S_stop-loss defines the level below which the entire position is unwound.