Explanation:
A calendar spread, also known as a horizontal spread or a time spread, is a strategy that involves buying and selling two options of the same type (calls or puts), same underlying security, same strike price, but with different expiration dates. The investor sells an option with a near-term expiration date and buys an option with a longer-term expiration date. The strategy is named 'calendar spread' because it involves options with different expiration dates.
Q.776 An investor is interested in a spread trading where he can sell a European call option and buy a European call. If the investor wishes for the expiration date of the long call to be greater than the short call, then which of the following is the strategy he is interested in?
A
Bull spread
B
Bear spread
C
Butterfly spread
D
Calendar spread
No comments yet.