# Calendar Spread

*Derivatives & Options — Finicade finance glossary*

A calendar spread sells a near-dated option and buys a longer-dated one at the same strike, harvesting the fact that short-dated options decay faster. It's really a trade on the volatility term structure rather than on direction, and it profits most when the underlying sits near the strike as the front leg expires. Its hidden exposure is vega: a collapse in longer-dated implied volatility can lose money even when the price behaves exactly as hoped.

**Also known as:** time spread, horizontal spread, diagonal spread

**Related terms:** [Vertical Spread](https://finicade.com/glossary/vertical-spread), [Theta](https://finicade.com/glossary/theta), [Volatility Term Structure](https://finicade.com/glossary/volatility-term-structure), [Implied Volatility](https://finicade.com/glossary/implied-volatility), [Expiration](https://finicade.com/glossary/expiration)

Source: https://finicade.com/glossary/calendar-spread