Diagonal Spreads Portfolio

This strategy works similarly to a covered call, except a less expensive, long-dated in-the-money call option is substituted for the long stock position. This allows for a greater rate of return, while the trade remains profitable if the stock rises, goes sideways or even dips a bit.

Strategy Details

The goal for these trades is to generate a 25 to 30% annualized return. This strategy creates simulated covered calls by selling a short-term call while simultaneously buying a long-term call at a lower strike price.  

Ideal Result

Ideally, your sold calls are in-the-money during the week before expiration. In that case we exit the position for a larger profit than targeted. To exit, one buys back sold calls and sell long-term call for a net credit. The credit will generally be larger than the difference between the strike prices of our options.

Diagonal Spreads Performance 

In 2017 The Diagonal Spreads Portfolio has an annualized return of 40%. 15 out of 16 trades were winners for a 94% win rate.

To see the trade history of the Diagonal Spreads Portfolio, feel free to visit the Closed Trade page.

Choose your plan


$49 /month

Quarterly (Save 15%)

$125 /quarter

Yearly (Save 25%)

$440 /year