Strategy lesson · Spreads · bearish
Put Diagonal Spread Explained
Put diagonal with mixed strikes/expiries — often a bearish financing structure analogous to the call diagonal.
How a Put Diagonal Spread is built
Long higher-strike longer put + short lower-strike nearer put (typical template).
This is a multi-expiry strategy — front-month and back-month legs interact. Use the multi-expiry heatmap, not expiration-only thinking alone.
- Leg 1: buy put · strike template 100 · premium ~5.5 · 1 contract(s) · 60 DTE
- Leg 2: sell put · strike template 90 · premium ~1.8 · 1 contract(s) · 30 DTE
Risk & reward snapshot
| Market bias | bearish |
|---|---|
| Max profit | Path-dependent. |
| Max loss | Often near debit; confirm on calculator through both dates. |
| Breakeven | Multi-expiry dependent. |
Figures are conceptual for the classic structure. Your actual premiums, strikes, and fees change the numbers — confirm on the calculator.
When traders use it
- Mildly bearish with a plan to sell front-month put premium against a longer put.
Key risks
- Sharp moves and assignment on the short put require active management.
Practical tips
- Heatmap view is essential — expiration-only charts miss calendar effects.
Practice on the calculator
- Open the Put Diagonal Spread calculator.
- Load a symbol and option chain; fill realistic mid premiums.
- Review max profit, max loss, breakevens, and the date × price heatmap.
- Change strikes and DTE to see how risk shape shifts.
FAQ
What is a Put Diagonal Spread?
Put diagonal with mixed strikes/expiries — often a bearish financing structure analogous to the call diagonal.
What is the max loss on a Put Diagonal Spread?
Often near debit; confirm on calculator through both dates.
When should I use a Put Diagonal Spread?
Mildly bearish with a plan to sell front-month put premium against a longer put.