Long one delivery month and short another in the same product. The level of the curve drops out and its shape is what is left: the position pays when the differential between the two months widens or narrows, largely irrespective of the outright price. Every roll of a long-dated futures position is this trade, whether the person doing it thinks of it that way or not. Storage, financing and seasonality drive the differential, so contango and backwardation are the working vocabulary here rather than bullish and bearish. Set the two months here and read the spread and the carry implied between them.
The full Futures Calendar Spread guide, worked example and FAQs →
Same order type as any futures spread — one ticket, two delivery months, reduced margin from the exchange recognizing the offset. The near leg's first notice date is the real deadline on this position if the product is physically delivered; the spread has to be closed or rolled before it, regardless of where the differential sits. Because the position is quoted directly as the spread value rather than as two prices, watching that single number is usually more useful day to day than watching either outright leg.
The near leg's first notice date is a hard deadline in a physically delivered product — holding a short near leg past it, rather than rolling or closing, can create a delivery obligation neither side of the trade was meant to take on. Because contango is capped by the cost of storage and financing while backwardation is not, position sizing here is often asymmetric: smaller size when positioned for the capped side, more room allowed when positioned for the side with no structural ceiling. The spread is quoted directly as a single number at most venues, which is the figure to watch rather than either outright leg.
Common mistake. The common mistake is holding a short near-month leg on a physically delivered product past its first notice date, turning a spread position into an unintended delivery obligation.
| # | Action | Instrument | Strike |
|---|---|---|---|
| 1 | Buy | CL Dec future | 78.40 |
| 2 | Sell | CL Jun future | 80.10 |
Computed from the same strikes and net premium as the worked example above — not a simulation, the closed-form payoff evaluated at each price.
| Spread (Dec − Jun) | P&L |
|---|---|
| -3.7 | -$2000.00 |
| -2.7 | -$1000.00 |
| -1.7 | $0.00 |
| -0.7 | $1000.00 |
| 0.3 | $2000.00 |
| 1.3 | $3000.00 |
| Strategy | Market view | Opened for | Legs vs. this one |
|---|---|---|---|
| Futures Spread | Relative value — non-directional | Margin | same |
| Futures Inter-Commodity Spread | Relative value — processing margin | Margin | +1 |
| Futures Basis Trade | Arbitrage — carry capture | Margin | same |
| Calendar Spread | Neutral — long volatility of time | Debit | same |