What is a Time Spread?
The time spread is an approach or strategy to option buying and selling. Within the context of a time spread, the investor will make use of a combination of purchasing and selling put and call options to achieve a desired result. This option strategy will involve options that have the same strike price, but which carry different expiration dates. Sometimes referred to as a horizontal spread, the main function of the time spread is to allow the investor to continue enjoying the returns on the options involved. A common structure for a time spread is the sale of a put or call option that is nearing the end of its term, while purchasing a similar option that carries the same strike price and is longer or further in term. This approach helps to keep the portfolio balanced as far as the type of options involved, and also allows the investor to continue enjoying similar benefits without having to be unduly concerned about expiration dates. One of the easiest ways to understand the operating
