DaytradeTeam Brainzzzz

A Diagonal Call Spread is basically a way of doing a covered call position without using as much buying power. Instead of buying stock, you buy long term call options that are deep in the money.

Here are the basic steps to establishing and getting out of a diagonal call position for maximum profit:

1. Find a stock that you believe will move higher in the near future. When using this options trading strategy, we suggest using a stock that is in a confirmed uptend.
   
2. Buy a call option that is well in the money and at least 5 months from its options
   expiration.
   
3. Sell a call option with a higher strike price (ideally out of the money) that expires within the next 45 days.

Hopefully, the stock will continue its uptrend pattern, causing the lower strike price option that you own to increase in value, but will stay under the higher strike price so that you simply take the income from the sold position and sell another high strike price option again the following month.

Diangonal Call Options Spreads are ideal for income production within your portfolio because they profit from time premium decay while utilizing less buying power from your account than traditional covered call options spreads.

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