Bearish Options Strategies
Learning how to make money in down markets is a critical component to your long-term success rate. The ability to profit when stocks are falling gives options traders a superior edge in the financial markets.
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Call Diagonal Spread

A call diagonal spread is a multi-leg, risk-defined, bearish strategy with limited profit potential. A call diagonal spread is entered when an investor believes the stock price will be neutral or bearish short-term.
Call Diagonal Spread
Kirk Du Plessis
Apr 19, 2021

You can think call diagonals as a two-part strategy. Thats because it's basically a cross between a long calendar spread and a short call credit spread. Having features of both basic strategies, this more advanced strategy profits from both a decay in the option prices differential between contract months and the downward directional move in the underlying stock. For the call diagonal spread, you'll first sell a call OTM in the front month and then buy a further OTM call in the back month. This gives your strategy the skew lower because you have an embedded credit spread.

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Custom Naked Call
A custom naked call is a bearish options strategy that combines two strategies, which provides some protection if the stock moves higher. Think of the strategy as entering an iron condor without the long call.

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