DEFINITION of 'Reverse Calendar Spread'
An options or futures spread established by purchasing a position in a nearby month and selling a position in a more distant month. The two positions must be purchased in the same underlying market and must have the same strike price. The goal of a reverse calendar spread is to capitalize on major price fluctuations.
BREAKING DOWN 'Reverse Calendar Spread'
A reverse calendar spread is most profitable when markets make a huge move in either direction. It is not commonly used by individual investors trading stock or index options because of the margin requirements; it is more common among institutional investors.
The opposite of this strategy is the calendar spread.