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Double Diagonals


Double diagonals are a favorite among professional index option traders. The double diagonal capitalizes perfectly on the moderate range of the index versus singular components by selling a front premium to capture the accelerated time value decay while leaving the back month purchased options to gain value following the expiration of the short premium. This situation creates a long strangle in the index after the expiration of the front options with the choice to roll the short options forward into the short condor or maintain a directional position with one of the long options by allowing the shorts to expire. The spread is limited risk and an excellent choice for range-bound index markets.

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All material is for informational purposes only and Qwoter is not responsible for any errors or omissions. The information is subject to change without notice and should
not be construed as definitive investment advice or recommendations. Please consult your tax or legal advisor(s) for questions concerning your personal or financial situation.