Calendar Spreads - Need help
For both Long Call / Put, I understand the logic of how to profit; namely, one hopes for the strike price to stay either below (in case of call) or above (for put) to get the premium from the first leg as it expires worthless. Then, one has the hope that it will either rise in value (long call) or decline (long put) to maximize profit in the second leg. I am confused, however, by this graph. Why is it that the price remaining as close to the strike price maximizes the profit of a calendar spread? Numerical examples would be especially helpful.
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