Glossary term
Diagonal Spread
An options spread using different strikes AND different expiries; typically a longer-dated long leg against a shorter-dated short leg.
A Diagonal Spread is an options position combining different strike prices and different expiration dates, usually a longer-dated long option against a shorter-dated short option. It blends the directional structure of a vertical spread with the time-decay harvesting of a calendar spread. The short leg is rolled forward repeatedly to collect premium against the long leg. See Greeks 101.