Diagonal Spread
A diagonal spread combines two options at different strikes AND different expiration dates — one sold, one bought — blending a directional view with the same time-decay dynamic a calendar spread uses.
Illustrative — Valued at the Near Expiration
Diagonal spread — the near-dated leg is at expiration; the farther-dated leg still holds time value, priced theoretically.
Illustrative example — not live market data.
Requires Two Expiration Dates
This structure only works with two different expiration dates, so it isn't a one-click preset in OptionLab today. Build it in Manual Market instead, where every leg gets its own expiration date. US and Israel market builders currently use one shared expiration for the whole position.
Related Strategies
How It Works
A diagonal spread sells a near-dated option at one strike and buys a farther-dated option at a different strike — the exact strikes and directions depend on the outlook being expressed. At the near option's expiration, it settles at intrinsic value while the farther-dated option still has remaining time, so its value depends on both the strike difference and where the underlying is trading.
Like a calendar spread, this is not a one-click preset in OptionLab today — it's built by placing two legs with different strikes and different expiration dates, which requires Manual Market (see the callout above).
Build a Diagonal Spread in Manual Market
Add two option legs at different strikes, then give each one its own expiration date — one near, one farther out. OptionLab values the farther-dated leg theoretically and shows you the resulting payoff, breakeven points, and maximum profit and maximum loss.
Open Manual Market