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Seasoned VeteransMildly Bullish
Diagonal Spread (Calls)
Overview
A combination of a vertical and calendar spread. You buy a longer-dated ITM/ATM call and sell a shorter-dated OTM call. Like a covered call using a LEAPS option instead of stock. Benefits from time decay and directional movement.
Max Profit
Variable — depends on strikes and time decay
Max Loss
Net premium paid or debit
Breakeven
Varies with strikes and premiums
Structure
Short 1 near-term OTM Call + Long 1 longer-term lower-strike Call
Risk Profile
Limited and variable profit. Limited risk. Benefits from time decay and mild directional moves.
When to Use
When you're mildly bullish and want to profit from time decay. More capital efficient than owning shares. When you expect gradual rather than explosive upward movement.