Definition of Horizontal Spread

Horizontal spread is also known as a calendar spread, the simultaneous purchase and sale of two calls or two puts on the same underlying security with the same exercise price buy with different expiration months.

Applying "Horizontal Spread" to Securities Exams:

A horzonntal spread is also known calendar spread or time spread and contains one long option and one short option of the same class with different expiration months. It is called a horizontal spread because of how the options are listed in the option chain or in the newspaper. An investor who is long a horizontal spread would purchase the option with the longer expiration and sell the option with the shorter expiration. This would result in a net debit in the investor’s account.

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