A time spread, also known as a calendar spread or horizontal spread, is an options trading strategy that involves simultaneously buying and selling two options with the same strike price but different expiration dates. This strategy capitalizes on the difference in time decay (theta) between the two options. Time spreads can be used with both call options (bullish strategy) and put options (bearish strategy), and they aim to profit from the relative movement of time value erosion between the options.

Here's how a time spread works:

1. Select the Same Strike Price: The trader chooses an options contract with a specific strike price. This strike price remains constant for both the options involved in the spread.

2. Different Expiration Dates: Two option contracts are used - one with a closer expiration date (near-term option) and another with a later expiration date (far-term option). The near-term option will have less time value remaining, while the far-term option will have more.

3. Buying and Selling: The trader simultaneously buys the far-term option and sells the near-term option. This establishes a spread position. The reason for this is that the time decay (theta) of the near-term option is typically faster than that of the far-term option.

4. Profit Potential: The goal is to profit from the difference in time decay. If the underlying asset's price remains relatively stable or moves moderately in the direction favoring the position (up for a call time spread or down for a put time spread), the trader can benefit as the near-term option loses value faster than the far-term option. The spread increases in value as the difference between the two options widens.

5. Risk Management: Time spreads have limited risk since the trader is both buying and selling options. However, the maximum profit potential is also capped, usually occurring when the underlying asset's price is close to the strike price at the expiration of the near-term option.

6. Adjustment and Closing: Traders can adjust or close their time spread position before expiration, depending on market conditions and their profit objectives.

Time spreads are popular among options traders looking for relatively low-risk, income-generating strategies. They are especially useful when an investor anticipates a period of low volatility in the underlying asset's price. However, like all options strategies, time spreads carry risks, including potential losses if the underlying asset experiences significant price movement.

A time spread is an options strategy that involves simultaneously buying and selling options with the same strike price but different expiration dates. It aims to profit from the difference in time decay between the two options and is commonly used in neutral or low-volatility market conditions.