Horizontal Spread

Posted in Finance, Accounting and Economics Terms, Total Reads: 1033

Definition: Horizontal Spread

It is an option strategy where two options which are of same type (involving the same underlying stock), have same strike price but different expiration months are bought and sold simultaneously. It is also known as time spread or calendar spread.

Horizontal Spreads can be further specified into-

1. Call Calendar spread- In this strategy long term calls are bought and equal numbers of short term calls are sold.

2. Put Calendar spread- The same strategy is executed by puts.

3. Bull calendar Spread- If bullish market is expected then this strategy is used. In this strategy short term calls are sold and same numbers of long term calls are bought which has same underlying.

4. Neutral Calendar spread- Here the trader is indifferent on the underlying stock and tries to earn some profit from the time decay by selling short term calls.

For example, A trader is buying a Nov 20th call and selling June 20th call.


Hence, this concludes the definition of Horizontal Spread along with its overview.

Browse the definition and meaning of more terms similar to Horizontal Spread. The Management Dictionary covers over 7000 business concepts from 6 categories. This definition and concept has been researched & authored by our Business Concepts Team members.

Search & Explore : Management Dictionary

Share this Page on:
Facebook ShareTweetShare on Linkedin