A short calendar spread benefits from a decrease in implied volatility, since it would make the short position more valuable. If the shorter-dated option expires ATM, the longer-dated premium would rise, which is a loss on the short position.
May I know why? Thanks!
Longer Dated options have more theta since the time to expiry is more therby giving more room or probability for the option buyer to exercise the options compared to the shorter dated options. This increases the value of the longer dated options hence longer dated options are expensive than shorter dated options.