Diagonal Bull Put – The Option Strategy Desk Reference

Diagonal Bull Put

Strategy: Sell n Puts, Expire 56 DTE

Buy n Puts @ Lower Strike, Expire 90 DTE

Example:

Price Chart: Uptrending

Current IV%: 60%

IV Rank: 70

Trade: Sell n put options; buy n put options, lower strike and several expirations later.

Typical Strike Deltas:

Short Put 0.25 or less

Long Put 2 or more strikes below short put for premium collection

Goals: Rally moves both long and short puts farther OTM; short puts are rolled two or more times for additional premium.

Manage: If short put remains OTM, roll to collect additional premium. If underlying drops, prevent short put from either expiring ITM or being exercised. Retain long put if profitable or sell long put to recover remaining premium.

Profit: Close when profit exceeds 30 percent.

Loss: Close when premium value loses 8 percent.