{"id":1262,"date":"2019-10-09T07:58:36","date_gmt":"2019-10-08T23:58:36","guid":{"rendered":"https:\/\/www.btse.com\/blog\/?p=1262"},"modified":"2023-03-07T10:01:01","modified_gmt":"2023-03-07T10:01:01","slug":"intro-to-calendar-spread-trading","status":"publish","type":"post","link":"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/","title":{"rendered":"Intro to Calendar Spread Trading"},"content":{"rendered":"<p>A calendar spread, also known as a horizontal spread, is a market-neutral trading strategy that includes buying and selling the same underlying asset at the market price, but with a different expiration date. The idea behind this strategy is that investors can profit from the potential increase in volatility and the passage of time.<\/p>\n<p>&nbsp;<\/p>\n<h2><strong>Structure<\/strong><\/h2>\n<p>The most traditional version of a calendar spread strategy is established by taking a long position with a long-term expiration date, compared to the short position with a near-term expiration date.<\/p>\n<p>Of course, one can also go the other way around &#8211; establish a short position on a long-term contract and a long position on a contract with a near-term expiration date. With the time decay, near-term contracts are losing value at a faster pace than long-term contracts. Hence, investors are selling near-term and buying long-term.<\/p>\n<p>&nbsp;<\/p>\n<h2><strong>Statistical Arbitrage<\/strong><\/h2>\n<p>Similar to the calendar spread trading strategy, statistical arbitrage (\u201cstat arb\u201d) is another market-neutral strategy based on the simultaneous buying and selling of two or more correlated assets. Developed by Morgan Stanley in the 1980s, the most popular version of this strategy is the so-called \u201cpairs trading\u201d. While the focus of the calendar spread trading is the duration of contracts, the stat arb focuses on the correlation between two or more assets.<\/p>\n<p>The pairs trading strategy is designed in such a way that investors open a long and a short position in two different assets with a positive correlation. The apparent aim is to profit from the correlated asset\u2019s mispricings as the net profit represents the total gained from the two or more positions.<\/p>\n<p>As the name says, statistical arbitrage uses technical and statistical analysis to identify the best financial instruments for this strategy. In a similar manner to the traditional stock market, where analysts search for companies in the same sector with similar market movements, cryptocurrency traders analyze the cryptocurrency market to identify two or more digital assets with a high correlation.<\/p>\n<p>By buying and selling two or more digital assets with a positive correlation, investors hope that the value of the underperforming digital asset increases while the outperforming asset\u2019s price deflates.<\/p>\n<p>&nbsp;<\/p>\n<h2><strong>Risks<\/strong><\/h2>\n<p>A major risk concerning calendar spread trading relates to sharp movements in the price action in either direction that can have negative effects on short-term contracts. On the other hand, the fact that statistical arbitrage is based on historical correlation doesn\u2019t mean that future trends will be replicated. For this reason, analysts target only pairs with a very strong positive correlation, which is extremely difficult to identify, especially in a relatively young and new cryptocurrency market.<\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<p><i>Our aim is to create a platform that offers users the most enjoyable trading experience. If you have any feedback, please reach out to us at\u00a0<\/i><a href=\"mailto:feedback@btse.com\"><i>feedback@btse.com<\/i><\/a><i> or on Twitter @BTSE_Official.<\/i><\/p>\n<p class=\"p1\"><i><span style=\"font-weight: 400;\">Note: BTSE Blog contents are intended solely to provide varying insights and perspectives. Unless otherwise noted, they do not represent the views of BTSE and should in no way be treated as investment advice. Markets are volatile, and trading brings rewards and risks. Trade with caution.<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A calendar spread, also known as a horizontal spread, is a market-neutral trading strategy that includes buying and selling the same underlying asset at the market price, but with a different expiration date. The idea behind this strategy is that investors can profit from the potential increase in volatility and the passage of time. &nbsp; [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":5143,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-1262","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-education"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.3 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Intro to Calendar Spread Trading &#8212; BTSE Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Intro to Calendar Spread Trading\" \/>\n<meta property=\"og:description\" content=\"A calendar spread, also known as a horizontal spread, is a market-neutral trading strategy that includes buying and selling the same underlying asset at the market price, but with a different expiration date. The idea behind this strategy is that investors can profit from the potential increase in volatility and the passage of time. &nbsp; [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/\" \/>\n<meta property=\"og:site_name\" content=\"BTSE Blog\" \/>\n<meta property=\"article:published_time\" content=\"2019-10-08T23:58:36+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-03-07T10:01:01+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.btse.com\/blog\/wp-content\/uploads\/2023\/03\/602931_ce26f9e99c824e5391d523445c1576f6-mv2_d_3840_2160_s_2.png\" \/>\n\t<meta property=\"og:image:width\" content=\"3840\" \/>\n\t<meta property=\"og:image:height\" content=\"2160\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"BTSE\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@BTSE_Official\" \/>\n<meta name=\"twitter:site\" content=\"@BTSE_Official\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"BTSE\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Intro to Calendar Spread Trading &#8212; BTSE Blog","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/","og_locale":"en_US","og_type":"article","og_title":"Intro to Calendar Spread Trading","og_description":"A calendar spread, also known as a horizontal spread, is a market-neutral trading strategy that includes buying and selling the same underlying asset at the market price, but with a different expiration date. The idea behind this strategy is that investors can profit from the potential increase in volatility and the passage of time. &nbsp; [&hellip;]","og_url":"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/","og_site_name":"BTSE Blog","article_published_time":"2019-10-08T23:58:36+00:00","article_modified_time":"2023-03-07T10:01:01+00:00","og_image":[{"width":3840,"height":2160,"url":"https:\/\/www.btse.com\/blog\/wp-content\/uploads\/2023\/03\/602931_ce26f9e99c824e5391d523445c1576f6-mv2_d_3840_2160_s_2.png","type":"image\/png"}],"author":"BTSE","twitter_card":"summary_large_image","twitter_creator":"@BTSE_Official","twitter_site":"@BTSE_Official","twitter_misc":{"Written by":"BTSE","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/#article","isPartOf":{"@id":"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/"},"author":{"name":"BTSE","@id":"https:\/\/www.btse.com\/blog\/#\/schema\/person\/46ad80e1bffe6cf5d79938127822f2ca"},"headline":"Intro to Calendar Spread Trading","datePublished":"2019-10-08T23:58:36+00:00","dateModified":"2023-03-07T10:01:01+00:00","mainEntityOfPage":{"@id":"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/"},"wordCount":525,"publisher":{"@id":"https:\/\/www.btse.com\/blog\/#organization"},"image":{"@id":"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/#primaryimage"},"thumbnailUrl":"https:\/\/i0.wp.com\/www.btse.com\/blog\/wp-content\/uploads\/2023\/03\/602931_ce26f9e99c824e5391d523445c1576f6-mv2_d_3840_2160_s_2.png?fit=3840%2C2160&quality=75&ssl=1","articleSection":["Education"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/","url":"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/","name":"Intro to Calendar Spread Trading &#8212; BTSE Blog","isPartOf":{"@id":"https:\/\/www.btse.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/#primaryimage"},"image":{"@id":"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/#primaryimage"},"thumbnailUrl":"https:\/\/i0.wp.com\/www.btse.com\/blog\/wp-content\/uploads\/2023\/03\/602931_ce26f9e99c824e5391d523445c1576f6-mv2_d_3840_2160_s_2.png?fit=3840%2C2160&quality=75&ssl=1","datePublished":"2019-10-08T23:58:36+00:00","dateModified":"2023-03-07T10:01:01+00:00","breadcrumb":{"@id":"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/#primaryimage","url":"https:\/\/i0.wp.com\/www.btse.com\/blog\/wp-content\/uploads\/2023\/03\/602931_ce26f9e99c824e5391d523445c1576f6-mv2_d_3840_2160_s_2.png?fit=3840%2C2160&quality=75&ssl=1","contentUrl":"https:\/\/i0.wp.com\/www.btse.com\/blog\/wp-content\/uploads\/2023\/03\/602931_ce26f9e99c824e5391d523445c1576f6-mv2_d_3840_2160_s_2.png?fit=3840%2C2160&quality=75&ssl=1","width":3840,"height":2160,"caption":"Intro to Calendar Spread Trading"},{"@type":"BreadcrumbList","@id":"https:\/\/www.btse.com\/blog\/intro-to-calendar-spread-trading\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.btse.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Intro to Calendar Spread Trading"}]},{"@type":"WebSite","@id":"https:\/\/www.btse.com\/blog\/#website","url":"https:\/\/www.btse.com\/blog\/","name":"BTSE Blog","description":"Navigating the Crypto Frontier - Insights, Analysis, and Strategies","publisher":{"@id":"https:\/\/www.btse.com\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.btse.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.btse.com\/blog\/#organization","name":"BTSE","url":"https:\/\/www.btse.com\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.btse.com\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/www.btse.com\/blog\/wp-content\/uploads\/2023\/03\/btse-logo.png","contentUrl":"https:\/\/www.btse.com\/blog\/wp-content\/uploads\/2023\/03\/btse-logo.png","width":1007,"height":306,"caption":"BTSE"},"image":{"@id":"https:\/\/www.btse.com\/blog\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/x.com\/BTSE_Official","https:\/\/discord.com\/invite\/btse","https:\/\/www.linkedin.com\/company\/btsecom\/","https:\/\/t.me\/btsecom"]},{"@type":"Person","@id":"https:\/\/www.btse.com\/blog\/#\/schema\/person\/46ad80e1bffe6cf5d79938127822f2ca","name":"BTSE","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/dc01110861deb9c4a6b15c6c841e4457320749d7c005164340fbf8d4eacefc5d?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/dc01110861deb9c4a6b15c6c841e4457320749d7c005164340fbf8d4eacefc5d?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/dc01110861deb9c4a6b15c6c841e4457320749d7c005164340fbf8d4eacefc5d?s=96&d=mm&r=g","caption":"BTSE"},"sameAs":["https:\/\/www.btse.com\/blog"],"url":"https:\/\/www.btse.com\/blog\/author\/btseadmin\/"}]}},"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.btse.com\/blog\/wp-content\/uploads\/2023\/03\/602931_ce26f9e99c824e5391d523445c1576f6-mv2_d_3840_2160_s_2.png?fit=3840%2C2160&quality=75&ssl=1","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.btse.com\/blog\/wp-json\/wp\/v2\/posts\/1262","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.btse.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.btse.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.btse.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.btse.com\/blog\/wp-json\/wp\/v2\/comments?post=1262"}],"version-history":[{"count":2,"href":"https:\/\/www.btse.com\/blog\/wp-json\/wp\/v2\/posts\/1262\/revisions"}],"predecessor-version":[{"id":5786,"href":"https:\/\/www.btse.com\/blog\/wp-json\/wp\/v2\/posts\/1262\/revisions\/5786"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.btse.com\/blog\/wp-json\/wp\/v2\/media\/5143"}],"wp:attachment":[{"href":"https:\/\/www.btse.com\/blog\/wp-json\/wp\/v2\/media?parent=1262"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.btse.com\/blog\/wp-json\/wp\/v2\/categories?post=1262"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.btse.com\/blog\/wp-json\/wp\/v2\/tags?post=1262"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}