Horizontal Calendar (Time) Spread Characteristics
An options trader sells 1 XYZ June 50 Call and buys 1 XYZ Sept 50 Call. This position is best characterized as a:
A calendar (horizontal/time) spread uses the same strike price ($50) but different expirations. The longer-dated Sept option has more time value than the near-term June option, making this a net debit spread.
Complete Analysis & Legal Rationale
Because strike prices are identical ($50) and expirations differ (June vs Sept), this is a calendar/horizontal spread. Far-month options always carry more extrinsic time value than near-month options, so buying Sept and selling June creates a net debit.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Correctly identifies horizontal spread with net debit due to greater time value in the September leg.
Vertical spreads have different strikes with identical expiration months.
Diagonal spreads have BOTH different strikes and different expirations.
A straddle consists of a call and a put, not two calls.