NexusFi: Find Your Edge


Home Menu

 





Adjustments To A "Long-Term" Diagonal


Discussion in Options

Updated
    1. trending_up 1,703 views
    2. thumb_up 0 thanks given
    3. group 1 followers
    1. forum 1 posts
    2. attach_file 0 attachments




 
Search this Thread
  #1 (permalink)
mks212
NY, NY
 
Posts: 12 since Apr 2015
Thanks Given: 6
Thanks Received: 1

I have been placing diagonal trades for a bit and have had moderate success. The idea is to sell weekly puts against a longer term long put and do this each week until about a month before the longer term put is 30 days from expiration.

As with many things in options trades, adjustments make quite the difference.

Let's use this as an example.

XYZ at $150 at time of trade entry
Long 145 Oct Put for debit of $4.00
Short 150 Aug Put for credit of $2.50

The ideal scenario is that the stock price barely moves and you close the short 150 put for $0.10 or so, and then sell the following week's $150. Sometimes this happens and it's great.

So far, no adjustments needed.

Let's say the stock moves sharply higher, to $160. In that case, the spread between the short ATM put I would like to write, and my long put is too large for comfort. I will sell back the Oct 145 Put (for a loss) and buy the 155 put (for a profit) and then sell the next weekly 160 put. Hopefully, this doesn't happen so often that the losses overcome the gains from the weekly sales. In my experience, it hasn't.

Last scenario, let's say the stock drops from 150 to 140. This is the case I am having a hard time with. Right now, I buy back the 150 put I sold and sell the next week's 150, hoping that the stock will rebound and I will make a large gain that makes up for the loss I took. If this happens more than 3 weeks in a row, the losses rack up quick. It's true that the 145 put buffers the loss which is the purpose of buying it in the first place.

Any other suggestions for how to adjust this position in light of a prolonged down move?

Thank you.


Reply With Quote

Can you help answer these questions
from other members on NexusFi?
Datafeed for Atas
Platforms and Indicators
requesting .nrd replay files from 2026 spy and qqq
The Elite Circle
No book, only a stair: journaling fills where price move …
Cryptocurrency
Trump Media to sell instant access to market-moving soci …
Traders Hideout
EA
Platforms and Indicators
 
Best Threads (Most Thanked)
in the last 7 days on NexusFi
Mes vs MNQ
6 thanks
NexusFi site changelog and issues/problem reporting
5 thanks
BERN ALGOS algo trading journal
3 thanks
TopStep Trader disappointment
2 thanks
Johnnys Journal
2 thanks




Last Updated on August 20, 2015


© 2026 NexusFi®, s.a., All Rights Reserved.
Av Ricardo J. Alfaro, Century Tower, Panama City, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada)
All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
About Us - Contact Us - Site Rules, Acceptable Use, and Terms and Conditions - Downloads - Top
no new posts