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2.10. Diagonal Call

ProficiencyDirectionVolatilityAsset LegsMax RiskMax RewardStrategy Type
N/A+
IntermediateBullish • Long CallCappedCappedIncome
   • Short Call   


2.10.1. Description

The Diagonal Call is a variation of a Covered Call where you substitute the long stock with a long-term deep In the Money long call option instead. This has the effect of reducing the investment, thereby increasing the initial yield. As with the Calendar Call, this initial yield is not necessarily reflective of the maximum yield at the expiration of the short-term short call. The maximum yield will depend on both the stock price and the residual value of the long unexpired call.


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