Diagonal spread

An options strategy requiring a long and a short position in the same class of option at different strike prices and different expiration dates. For example, buying an XYZ April 50 call and selling an XYZ July 55 call. See: Calendar spread; vertical spread.

Diagonal Spread

An option strategy in which one enters into a long position on a call (or a put) while taking a short position on another call (or put) with the same underlying asset, but with different strike prices and expiration dates. One gains (or loses) on the change in the spot price of the underlying asset over the life of the spread. It derives its name from the fact that it shares features with a vertical spread (where the calls or puts have different strike prices) and a horizontal spread (where they have different expiration dates).

diagonal spread

Any spread with different strike prices in which the purchased options have a longer maturity than the written options.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

References in periodicals archive

The 2X3 diagonal spread appears to roll short puts to Jan21, down 2.5 strikes, and is similar to ratio spreads that printed Monday, with open interest numbers showing 5.5K Jan 10 puts closed and 15K Jan21 7.5 puts opened.

Repeat put spreads in Cloudera ahead of earnings

[7] Nonstandard abbreviations: ER, estrogen receptor; qRT, quantitative reverse transcription; FFPE, formalin-fixed, paraffin-embedded; PAM, prediction analysis of microarray; SSP, single sample predictor; FF, fresh-frozen; Cy, cyanine; m, diagonal bias; d, diagonal spread; dsd, diagonal SD; [r.sub.d], diagonal correlation; ccc, concordance correlation coefficient; DWD, distance weighted discrimination; IHC, immunohistochemistry.

Agreement in breast cancer classification between microarray and quantitative reverse transcription PCR from fresh-frozen and formalin-fixed, paraffin-embedded tissues

With USO now down 16.3% in the past two weeks, 38.1K Oct 12 - Dec 10.5 put spreads trade 55c Monday and the diagonal spread likely rolls long puts to December from October, down 1.5 strikes, in anticipation of further losses in shares over the next six months.

US Oil Fund puts active as crude oil gives up earlier gains

Separately today, 1.3K Oct 11 - Jul 15 put spreads trade 96c and the diagonal spread apparently rolls long puts to Oct from Jul, down four strikes.

Goodyear puts active as shares gain traction

The diagonal spread appears to close long May 24th 10 puts, which are 30c ITM (stock was $9.50 at time of trade) and expiring tomorrow, that were opened 5/14 for 15c with shares $10.30.

Giant ratio spread in GE as shares drop 2.1%

The diagonal spread apparently rolls long May 12 puts opened earlier in May, including a 7.5K lot for 29c on 5/9 with shares $12.13.

10K VALE May 12

The diagonal spread appears to roll half of a position opened 2/15 when 40K Jul 95s bought for $6.53 (rolling out of Apr 95s with shares $98.86).

Repeat call spreads in Procter and Gamble as a bullish position is adjusted

General Mills call volume spikes on diagonal spread ahead of earnings.

General Mills call volume spikes on diagonal spread ahead of earnings

The $17.3M diagonal spread likely rolls a hedge out three months, to Sep from Jun, and down four strikes.

Active trading in PowerShares QQQ puts including a large spread