Diagonal Put Spread
Buy a longer-dated ITM Put and sell a shorter-dated OTM Put across different expirations to profit from downward drift with positive theta.
Interactive Payoff Curve & Greeks Simulation
Visualize the theoretical profit & loss at expiry vs T+0 immediate day curves. Drag the simulation slider to stress-test your trade.
Option Payoff Curve & Greeks
Net Option Greeks (Sensitivity Profile)
Values per 1 Lot standard unitMulti-Leg Position Structure (2 Legs)
| Action | Instrument / Strike | Type | Expiry | Approx Delta | Est. Premium | Qty Ratio |
|---|---|---|---|---|---|---|
| BUY | 24,800 PE (ITM) | PUT | 60 DTE Expiry | -0.65 | ₹580 | 1x |
| SELL | 24,200 PE (OTM) | PUT | 15 DTE Weekly | -0.30 | ₹130 | 1x |
How the Structure Works
Harvests the rapid theta decay of 14-day options against resilient 60-day options.
A Diagonal Put Spread buys a 60-day ITM Put and sells weekly OTM Puts against it. The rapid decay of the short put finances your long put while riding a multi-week downtrend.
Institutional Strike Selection Rules
Phased Execution Blueprint
Follow this structured sequence to eliminate emotional hesitation during order entry, lifecycle management, and final exit.
Multi-Week Downtrend
Deploy when expecting gradual multi-week downward drift.
Interactive Margin & Position Size Calculator
Calculate exact lot sizing based on the 1-2% risk rule to preserve capital against Black Swan events.
Options Position Size & Max Risk Calculator
Total net liquid equity in your brokerage account
Recommended: 1.0% - 2.0% for disciplined longevity
Wing width max loss or defined mental/system SL
Rigorous Risk Rules & Adjustment Protocols
Non-negotiable parameters for stop-loss triggers, portfolio caps, and firefighting adjustments when market tests your strikes.
- Roll short put to next weekly.
Calendar margin relief applies.
NIFTY Diagonal Put Spread Trade Walkthrough
Nifty drifted lower over 6 weeks.
Bought 60-day 24800 PE / Sold 15-day 24200 PE (x2 cycles)
- Collected multiple weekly short put premiums.
Common Mistakes to Avoid
Why it happens: Creates inverted diagonal.
Solution: Always sell short put lower than long put.
Institutional Pro Tips
Diagonal Put Spread FAQs
What is the main advantage over a vertical bear put spread?
You can sell multiple short options over time against a single long option, reducing cost basis to zero.
Alternative & Complementary Strategies
Buy a longer-dated ITM Call and sell a shorter-dated OTM Call across different expiration cycles to exploit time decay differential.
Buy a higher ATM Put and sell a lower OTM Put to reduce trade cost, neutralize theta decay, and capture defined-risk downside profits.
Sell a short-dated option and buy a longer-dated option at the same strike to exploit rapid near-term time decay with low capital risk.