Diagonal Spread Calculator

How this calculator works

A diagonal spread combines two options on the same stock or ETF with different expirations. The two strikes can differ. Matching the strikes produces a calendar spread. The long version buys the far option and sells the near option; the short version reverses those trades.

Enter your premiums per share and days remaining from today. At the near expiration, that option is valued at intrinsic value. The far option still has time remaining and is valued using a European Black–Scholes–Merton model. The result assumes both legs are closed or economically settled at these values at that time.

Reading the results

For example, buying a far option for $4 and selling a near option for $2 costs $200 for a 100-share spread before fees. If the near option expires worthless and the far option is worth $3, the estimated gain is $100 before fees. A lower far-option value can instead produce a loss.

Changing the far IV changes its remaining time value, so a calendar or diagonal has no single fixed payoff curve at the first expiration. The chart and breakeven crossings are model estimates under your selected IV assumptions.

Model limits

These calculators cover vanilla stock and ETF options with equal quantities and a shared multiplier. Inputs are manual, not live quotes. The model uses continuous rates and dividend yield, with 365 days per year. American early exercise, discrete dividends, bid–ask spreads, margin and assignment funding are not modeled. Closing both legs may be necessary to avoid an unwanted stock position. A short calendar can leave an uncovered longer-dated short option if the near option is allowed to expire.

The calculation stops at the first expiration; it does not project an assigned position or a subsequent roll.

Related lessons

Diagonal spread explained · Calendar calculator · All strategy calculators

Reference: OIC calendar spread guide.