Calendar Straddle or Combination

A calendar straddle (also called a calendar combination) is an options position built by combining two calendar spreads at the same strike, one using calls and one using puts, so the position mimics a straddle but across two different expiration dates instead of one.

To build it, a trader sells a near-term call and a near-term put at the same strike, and buys a longer-term call and a longer-term put, also at that same strike. All four options share one strike price, but the two expiration dates differ: the sold options expire sooner, the bought options expire later. "Option" here just means a contract giving the right (not the obligation) to buy (a call) or sell (a put) the underlying stock at a fixed strike price by a certain date.

The logic mirrors a basic calendar spread: the near-term options lose time value faster than the longer-term ones as expiration approaches (a property called time decay), so the short options can shrink in value relative to the long options even if the underlying stock barely moves. Combining a call calendar and a put calendar at the same strike doubles that time-decay exposure and also creates sensitivity to a big price swing in either direction, since a straddle-like structure profits from large moves as well as from decay, depending on how it's positioned.

The nuance that trips people up is that this is not one simple bet on "stock goes nowhere" or "stock moves a lot" — it has two separate expiration cycles interacting, so its value depends on the passage of time, on implied volatility (the market's priced-in expectation of future price swings) for each expiration separately, and on where the stock sits relative to the strike when the near-term options expire. Because it's four legs, transaction costs and bid-ask spreads matter more, and the position needs active management once the short-dated options expire.