How we Trade Diagonal Spreads (without over spending)

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Past performance is not indicative of future results. Performance is not presented net of all commissions, fees, and expenses. Multi-leg option strategies incur higher transaction costs than single leg trades as they involve multiple commission charges. Examples provided are for illustrative, informational, and educational purposes only and are not intended to be reflective of results you can expect to achieve. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request.

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[sandipmane]

Hi tasty ..I do apply diagonal on weekly expiry only if current ivs of options is higher than next expiry. so that i can enjoy more vix+timedecay in current expiry with hedge with long on next expiry ....I like this only to play on weekly expiry short time 1 or 2 days before current week expiry ..prefer over straddle on current weekly expiry ...

[DougSmileyVirgo]

Love directional strategy. I'm all about buying an ATM put with an average P/L.

[sirisilva]

Great topic, please provide few examples with SPY, dose this applies to micro /MES?

[WhatsUpRob]

🎯 Key Takeaways for quick navigation:

00:30 *📈 Diagonals are directional strategies with positive Theta, ideal for low implied volatility.*
01:43 *💡 Diagonals offer flexibility in setup, allowing adjustments for desired Delta exposure.*
02:40 *💼 Longer diagonals exhibit slightly larger Delta exposure than vertical spreads due to slower decay of longer-dated options.*
04:49 *💰 Diagonals are short Delta and long volatility trades, more suitable for low volatility environments.*
06:29 *🎯 Diagonals combine long volatility and directional exposure with minimal time decay, making them low-risk trades.*
07:12 *🔍 A 60-day expiration for the long put in diagonals tends to be optimal, offering exposure to volatility spikes while minimizing losses during bull markets.*

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[alexcampbello]

if your short leg assigned how do you manage the trade ??

[ACR]

I’m going to try this headed into 2024. Vol is low, and I feel like there is a monkey wrench for the market around the corner. I could use some low risk/low reward while “keeping the powder dry.”

[MHN]

It's a shame that this strategy doesn't really work with Options on Futures. It's the one major drawback with those.

[TerrapinTrader]

Been looking at diagonals for Dec/Feb as I don't want to make any more money until after Jan!

[LeosmithLaosmith]

I'd rather trade the Crypto market as its more profitable. I make an average of $15, 000 per week even though I barely trade myself