Double diagonal option trading strategy

double diagonal option trading strategy

back month options. The intention is to exploit time decay on sooner-expiring short positions and create profits that give greater advantage to longer-term long options. This is known as rolling out in time. If you are looking for a solid and reliable way to skim the markets and make significant returns, then the double diagonal strategy is one of the best approaches. Any one of those items can cause the price of the Underlying to jump. If the price of the underlying is too low, the price of the Options will be too low, and there won't be enough Time Premium decay to create a healthy profit. Thats because the back-month options are still open when the front-month options expire.

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This is based on the Vertical risk between our Short position at the 85 Strike, and our Long position at the 80 Strike: similar to a Condor. What is the Double Diagonal Trading Strategy? The amount of maximum loss on a Double Diagonal is like taking the potential loss on both sides of a Condor. Our goal is to make 5 a week. . We would put on both a call Diagonal and a PUT Diagonal: call Diagonal: We can Sell the 115 call Strike for the june Expiration for.00 per share, and we can Buy the 120 call Strike for the july Expiration for.10 per share. Maximum Potential Profit Potential profit for this strategy is limited to the net credit received for the sale of the front-month options at strike B and strike C, plus the net credit received for the sale of the second round of options at strike. Terrys Tips, stock Options Tutorial Program, (a.90 value). .