Put Calendar

A put is a type of derivative contract. It's an option that allows an investor to make money when the price of an underlying asset falls. (It grants the right, but not the obligation, to sell the underlying asset at a pre-set price at a pre-set time.)

A put calendar involves taking a bunch of racy pictures of various puts and assigning each one to a different month. You should see Mr. April.

Just kidding, of course. No one wants to see a put naked. (Calls are much more shapely.) Rather, a put calendar involves using multiple puts of different duration. Like...filling in your calendar with various puts for the same underlying asset. So, in April, this one expires...in June, that one expires...etc.

If all the puts have the same strike price (the pre-set price where you have the option to sell them), it's referred to as a horizontal spread. Basically, you are spreading out your bets. If the underlying asset doesn't drop into the money by April, maybe it will be there by June.

You can also set up a put calendar with different strike prices. This strategy is known as a diagonal spread. It represents a bet that an asset will continue to move lower over time. It will be down a little bit by the expiration of April's put, but down even more by the time the June expiration rolls around.