Diagonal Spread

Options Spreads Intermediate NIFTY BANKNIFTY FINNIFTY Stock Options

Moderately Directional - gradual move expected

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Quick Reference

Strategy Type	Combination - Directional Calendar
Market Outlook	Moderately Directional - gradual move expected
Risk Profile	Limited to Net Debit (approximately)
Reward Profile	Unlimited in theory through rolling, practically 50-150% of debit
Time Horizon	4-8 weeks with weekly rolling
Capital Requirement	Net debit Rs.200-350 per lot for standard diagonal
Best Used When	Moderate directional conviction with near-term IV elevated versus far-term, expecting gradual multi-week move

When to Use This Strategy

Moderate directional conviction with near-term IV elevated versus far-term, expecting gradual multi-week move

Payoff Diagram

P/L (at front-month expiry) - CALL DIAGONAL (Bullish) │ │ ╭───────╮ │ ╱ ╲ │ ╱ ╲ │ ╱ ╲ │ ╱ ╲ ─┼──────────●───────────●───────────────●─── Stock Price │ │ │ │ │ Long Strike Short Strike Upper BE │ │─ ─ ─ ─ ─ Max Loss (Net Debit) │

India-Specific Notes

Trading Hours

Equity	9:15 AM - 3:30 PM IST
Derivatives	9:15 AM - 3:30 PM IST
Pre Open	9:00 AM - 9:15 AM IST

Expiry Behavior

Weekly Expiry	Every Thursday (NIFTY, BANKNIFTY, FINNIFTY)
Monthly Expiry	Last Thursday of month (Stock options)
Settlement	Cash settled for index options
Diagonal Note	Weekly options allow frequent short leg rolling - excellent for diagonal management

Lot Sizes

Stocks

Varies by stock (check NSE)

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