---
name: skill-diagonal-spread
description: Different strikes and different expiries. Use for a longer-dated option financed in part by a nearer short option at another strike.
skill_family: options-strategy
last_updated: 2026-09-30
---

# Diagonal spread

## When to use

- The structure is not a vertical (different expiries) and not a calendar (different strikes).
- A call diagonal is the usual bullish illustration: longer-dated long call, nearer short call at a higher strike.

## Setup

- Long leg: farther expiry. Short leg: nearer expiry, different strike.
- State both strikes, both expiries, and the net debit or credit.
- The short leg is the one that can be assigned or rolled first.

## Rules of thumb

- The strike gap and the time gap are both intentional. Name each.
- Assignment or a roll applies to the short leg only. The long leg is the remaining exposure.
- Upside past the short strike can cap the near-term gain even while the long leg still has time.

## Pitfalls

- Expiries so close that the position behaves like a vertical.
- Short strike at or below the long strike, which can invert the payoff.
- Ignoring the debit if the long leg decays while the short premium was small.

## Disclaimer

Options involve risks and are not suitable for everyone. Read *Characteristics and Risks of Standardized Options* at OptionsEducation.org, or from your broker or the Options Clearing Corporation, before using this structure. Examples omit commissions, fees, margin, interest, and taxes. This is a structured playbook for education. It is not a signal, a recommendation, a solicitation, or a broker order.