What is a Diagonal Spread?
A Diagonal Spread is like a Calendar Spread but uses different strike prices across different expiries. You sell a near-term OTM option and buy a far-term option at a different (usually more favourable) strike. This creates a position with both directional and time-decay elements — the most flexible spread in options.
Nifty at ₹22,000. You sell the current-week 22,500 CE for ₹50 (OTM, 7 DTE) and buy next-month's 22,000 CE for ₹150 (ATM, 35 DTE). Net debit: ₹100 × 75 = ₹7,500. You're mildly bullish but also want time decay to work for you. If Nifty stays below 22,500 for the week, the short call expires worthless and you repeat next week.
At a Glance
Max Profit
Variable — depends on strikes/expiry combo
Breakeven
Diagonal · Mixed Directional + Time
Type
Advanced — requires active management
How to Set It Up
| Action | Type | Strike | Expiry | Qty |
|---|
| Sell | Call/Put | Near-term OTM | 7–14 DTE | 1 Lot |
| Buy | Call/Put | Far-term strike | 30–45 DTE | 1 Lot |
P&L Simulator
Diagonal Spread
📊 Diagonal Spread — Payoff Chart + P&L Calculator
Index Price: 22000 · Near-Term Strike Sold: 22500 · Far-Term Strike Bought: 22000 · Near-Term Premium: 50 · Far-Term Premium: 150 · Implied Volatility (%): 12 · Days Left on Far Option (at Near Expiry): 15 · Lot Size: 75 · Price at Exit: 22200
When Should You Use This Strategy?
✓ When to Use / ✕ When to Avoid / ◉ IV / ◷ DTE
3 use items · 3 avoid items
#Time & Diagonal
Disclaimer
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