A long calendar spread entails buying longer-dated options and selling shorter-dated
options with the same strike and underlying. In principle the premium on the shorter-dated should fall faster than the premium on the longer- dated. Thus more value is gained on the short position than is lost on the long position, and a net profit is realized.
You are short the near dated. As time moves on (all else equal) time decay will mean the premium declines. It could expire worthelss or we could close out at a lower premium.
Longer dated options won’t suffer as much theta decay so their value will not fall as much.
Short near dated earn premium of 3
Long far dated pay premium at 5
Time moves on
Premium on short dated drops to 2. Cover short Gain = 1
Premium on long dated drops to 4.25. Cover long. Loss 0.75
Overall gain 0.25
Finally I understood. Thank you so much.
You should read up on option Greeks.
In particular, Theta is the partial derivative of the option value V with respect to time t,
\Theta=\frac{\partial V}{\partial t} tells you how the option value changes with time