A Diagonal Spread combines elements of a calendar spread and a vertical spread:
Buy a longer dated call (eg. Jan 2026 USD 95 strike)
Sell a shorter dates call (eg. Nov 2025 USD 93 strike)
Both are calls but have different expiration dates & different strike prices.
Why is it effective for TLT?
Yield Drop = Bond Price Rise: As yields fall, TLT rises. A Diagonal Spread lets you profit from this move while reducing upfront cost.
Time Decay Advantage : The shorter term call in November decays faster, generating income to offset the cost of the long term call.
If TLT rises gradually you earn the premium. If it surges you ride the long call. If it stalls, you roll & adapt.
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- Venus ReadeΒ·2025-10-21TOPI wouldn't be at all surprised if gold touches the 5k mark by years end. After that a sell off is probable as the US tax code treats capital gains more favorably in 2026.1Report
- CornellRudolphΒ·2025-10-21TOPGreat strategy! Love the detail here! [Great]1Report
