A calendar spread requires the purchase and sale of two calls or two puts in the same stock
A) With the same expiration date but different exercise prices.
B) With the same exercise price but different expiration dates.
C) With different exercise prices and different expiration dates.
D) With the same exercise price and the same expiration month.
E) Traded in different markets.

Question

Quizplus · Accepted Answer

A calendar spread involves buying and selling two options of the same type (calls or puts) on the same underlying asset, but with different expiration dates. The strike prices can be the same or different, but the key characteristic is the difference in the expiration dates. Therefore, option choices A, C, D, and E are incorrect.

A Calendar Spread Requires the Purchase and Sale of Two