Diagonal Spread
Categories: Derivatives, Financial Theory, Stocks, Trading
A strategy for buying stock options where you both buy and sell stock options for the same stock at the same time—but the options you’re buying have a different expiration date and a different strike price than the options you’re selling.
Example
You buy $50 August Call option for $1, and Sell a $60 June Call option for $2. You’ve just created a diagonal spread.