Diagonal Spreads¶

Diagonal spreads combine elements of vertical spreads and calendar spreads, using different strikes AND different expirations. These hybrid strategies offer flexible profit zones and directional bias.

Long Call Diagonal¶

Description¶

Buy a longer-term call at one strike and sell a shorter-term call at a different strike. Combines time decay and directional movement.

Composition: - Short 1 front-month call - Long 1 back-month call - Different strikes for each leg

Example¶

import optopsy as op

results = op.long_call_diagonal(
    data,
    front_dte_min=20,
    front_dte_max=40,
    back_dte_min=50,
    back_dte_max=90,
    exit_dte=7
)

Use Cases¶

Bullish to neutral bias with income
More flexible than calendars
Adjustable directional exposure

Short Call Diagonal¶

Description¶

Opposite of long call diagonal. Buy near-term, sell longer-term at different strikes.

Composition: - Long 1 front-month call - Short 1 back-month call - Different strikes for each leg

Example¶

results = op.short_call_diagonal(data)

Long Put Diagonal¶

Description¶

Similar structure to call diagonals but using puts. Allows bearish to neutral positioning.

Composition: - Short 1 front-month put - Long 1 back-month put - Different strikes for each leg

Example¶

results = op.long_put_diagonal(data)

Short Put Diagonal¶

Description¶

Opposite of long put diagonal with reversed expiration dates.

Composition: - Long 1 front-month put - Short 1 back-month put - Different strikes for each leg

Example¶

results = op.short_put_diagonal(data)

Diagonal vs Calendar¶

Feature	Calendar Spread	Diagonal Spread
Strikes	Same	Different
Directional	Neutral	Can be directional
Complexity	Simple	More complex
Flexibility	Limited	High

Parameters¶

Diagonal spreads use calendar spread parameters but evaluate all strike combinations:

results = op.long_call_diagonal(
    data,
    front_dte_min=20,
    front_dte_max=40,
    back_dte_min=50,
    back_dte_max=90,
    leg1_delta={"target": 0.30, "min": 0.20, "max": 0.40},  # Front leg delta
    leg2_delta={"target": 0.30, "min": 0.20, "max": 0.40},  # Back leg delta
)

Strategy Tips¶

Start with calendar, adjust strikes as market moves
Monitor both time decay and directional movement
More management-intensive than calendars
Can convert to vertical spreads or calendars