Diagonal Spread Strategy
DirectionalAdvancedComplex Spread
Combine different strikes and expirations for a powerful hybrid strategy with time decay benefits.
How It Works
1
Sell Near-Term: Sell closer strike option with shorter expiration.
2
Buy Long-Term: Buy further strike option with longer expiration.
3
Roll Forward: Can roll short option at expiration for continued income.
Key Metrics
Max Profit:Strike difference + credit
Max Loss:Net Debit (if debit spread)
Breakeven:Varies with time
Time Decay:Generally favorable
Best Case:Gradual move to short strike