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Strategies & Market Trends : Option Strategies
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To: Hank Scorpio who wrote (2266)2/26/2021 2:24:07 PM
From: THornsby1 Recommendation

Recommended By
renovator

   of 2591
 
> I posted it wrong. You write the near term and buy the longer term timeframe. Write the Mar and buy the Apr. Currently about 1.40 credit. 372 break even.

Now that we've gotten the strategy clear, your initial premise was that conventional debit diagonal spreads "show long term negative returns. That is, you need direction to help out."

So instead, you've set up that spread via a synthetically equivalent position which has the same result. The only difference is that it's now done for a credit rather than a debit.

Either way, it's the same larger risk and smaller potential profit - clearly a directional play as you stated.
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