Value-Trades

Short Call Diagonal Strategy: Real Trade Example


Real Example (July 2025)

A short call diagonal spread involves selling a longer-term call at a lower strike and buying a shorter-term call at a higher strike. This strategy profits from bearish movement and time decay, but carries significant upside risk.
  • Stock: XYZ Corp
  • Outlook: Moderately bearish
  • Setup: Sell 1 XYZ $95 Call (Oct) @ $6.00; Buy 1 XYZ $105 Call (Aug) @ $2.20
  • Net Credit: $3.80 ($380 per contract)
  • Max Gain: $380 if stock stays below $95
  • Max Loss: Unlimited (if stock rallies)
  • Risk Note: Margin and monitoring required due to uncovered risk

Outcomes

Stock Price at Aug Expiration Short Call Value Long Call Value Net Position Value Profit/Loss
$90 $2.00 $0 -$2.00 +$180
$95 $5.00 $0 -$5.00 -$120
$105 $10.00 $0.00 -$10.00 -$620

Compare With Long Call Diagonal Strategy →

Learn Long Call Diagonal

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