---
title: "Diagonal Spread — options strategy"
type: "options-strategy"
topic: "Options strategies (Indian markets)"
category: "Directional"
outlook: "Bullish"
complexity: "advanced"
risk: "defined"
slug: "diagonal-spread"
url: "https://learn-derivatives.tapetide.com/strategies/diagonal-spread"
markdown_url: "https://learn-derivatives.tapetide.com/strategies/diagonal-spread.md"
source: "DeltaDesk by Tapetide"
---

# Diagonal Spread

> **In plain English:** A calendar spread with a directional tilt — different strikes AND different expiries. You blend a mild directional bet with a time-decay tailwind. Often run as a "poor man's covered call".

**Category:** Directional · **Market view:** Bullish · **Complexity:** advanced · **Risk:** Defined

## Structure

- Sell ATM+2 strikes call
- Buy ATM call

## Summary

Like a calendar but with different strikes — a directional + time-decay blend.

## When to use it

Mildly directional with a time-decay tailwind; a 'poor man's covered call' when the long leg is deep-ITM and far-dated.

## Profit & loss

- **Max profit:** Depends on the strikes/expiries; generally capped.
- **Max loss:** Net debit paid (approximately).

## Net Greeks profile

Directional delta + positive theta from the short leg.

## Margin

Margin-intensive (you sell options).

## Common mistakes

- Mismatched strike/expiry choices that invert the intended exposure.

## India example

Buy a monthly ATM call, sell a weekly 2-OTM call against it.

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**Build it live in the [DeltaDesk Strategy Lab](https://learn-derivatives.tapetide.com/tools/strategy-lab)** — tune strikes and see payoff + net Greeks update instantly.

*Educational content only — nothing here is investment advice. Derivatives carry significant risk of loss. Tapetide is not a SEBI-registered research analyst or investment adviser.*