Diagonal Spread: A Hybrid Strategy That Nets You Profit

Options contracts are one of the most sophisticated financial instruments that traders and investors use to profit from any given asset's price movements. 

Like futures contracts, option contracts minimize the buyer’s risk by assigning a predetermined price to an asset. Unlike futures contracts, however, there is no obligation for options buyers to purchase the asset before trading.

In this article, we’ll discuss an important options trading strategy — the diagonal spread — and learn how it’s relevant in the context of cryptocurrency.

What is a Diagonal Spread?

The diagonal spread serves as an alternative to typical calendar spread strategies, and can be lucrative if applied correctly. A "low intrinsic value" environment strategy, the level of flexibility and adaptability it offers are second to none.