/biz/ - Business & Finance

>>29610503
What you wanna do is pic related. You buy a long dated call with a lower strike price than the short dated option and yes it will cost. Here is how the money is made though: every day those options are in existance they lose value the amount of theta. The theta on the long dated option you bought is less than the theta on the short dated option. You pocket the difference every day until expiration or you sell.
In pic related, the option you bought has a theta of 0.1998 and the option you sold has theta of 1.06 so every day, all else being equal you pocket 86 cents times 100 so 86 dollars. There are other considerations regarding delta and vega specifically but fundamentally it's a theta play and that's how it works.