Calendar spreads are a combination of a buying a call to open a position and selling another call against that position. In other words, it combines a long call with a short call position. This is a covered call strategy where the underlying is a call option and the option sold is also a call option. As long as the strike price of the option purchase is equal to or lower than the strike price of the option sold, it’s a covered call position.
Calendar spreads can be used to leverage an investment account; putting it to work harder. The call option purchased costs a fraction of the price of purchasing the underlying so the premium received from the call sold is correspondingly higher as a percentage.