Calendar Spread — Volatility Divergence & Theta Play

Buy a longer-dated option and sell a shorter-dated option at the same strike. Classic calendar: sell the front-month ATM option, buy the next-month ATM option of the same type. The sold front-month decays faster (higher theta) than the bought back-month. The trade profits from the differential time decay between the two legs — and from a volatility expansion that affects the back-month more than the front-month.