Double Diagonal Calculator
Model your double diagonal before you place it. Enter your four option legs across two expirations to instantly see profit, loss, breakeven, and a full P&L diagram for your double diagonal position.
How to Use This Calculator
Enter your four option legs across two expirations and the calculator handles the rest. Results update instantly as you type.
Pull current market data (optional)
Type a ticker like AAPL and click Get Price. The calculator fills in the current stock price, dividend yield, and the risk-free rate from the 13-week T-bill, then loads the option chain so you can pick actual strikes and premiums.
Set up your double diagonal legs
The double diagonal legs are preloaded for you. Pick each strike, expiration, and premium straight from the option chain, or type your own numbers. The calculator works out implied volatility from the premium you enter, and you can still edit it.
Calculate and read the results
Click Calculate P&L to see max profit, max loss, breakeven, return on risk, and probability of profit, plus position Greeks: delta, gamma, theta, vega, and rho.
Stress test before you trade
Drag the view-date slider to see your P&L curve on any day before expiration, shift implied volatility up or down 50 points, and scan the price-by-date P&L table to see how the trade behaves across scenarios.
This double diagonal calculator prices each leg with your choice of an American-style binomial model (the default for US equity options) or European Black-Scholes-Merton, and accounts for dividend yield. You can set a per-contract commission, copy a shareable link to your exact setup, download the chart as a PNG, and switch to dark mode.
Understanding the Double Diagonal
Key numbers every double diagonal trader needs to know before entering the position.
A double diagonal combines a diagonal call spread with a diagonal put spread on the same underlying. You sell a near-term OTM strangle (one short call, one short put at front-month expiration) and buy a further-dated OTM strangle (one long call, one long put in a back month, at wider strikes). The result is a four-leg position that spans two different expirations.
The strategy profits from the time decay differential between the two expirations. Front-month options decay faster than back-month options, so as the short options lose value rapidly near expiration, the long back-month options retain more of their premium. When the stock stays between the two short strikes, the short options expire worthless while the long options still have time value to sell or hold.
Compared to an iron condor, the double diagonal has more moving parts because it involves two expirations. The back-month long options give the position more flexibility after the front month expires — you can roll the short side into a new front month, effectively turning the trade into a series of income-generating cycles. This makes the double diagonal a popular structure for traders who run systematic premium-selling programs in high implied volatility environments.
Double Diagonal Example Trade
XYZ is at $100. Sell 1-month $95 put for $1.20 and $105 call for $1.20. Buy 2-month $90 put for $1.50 and $110 call for $1.50. Net debit: $0.60.
Explore other options strategy calculators
Each strategy has its own dedicated calculator with a full P&L breakdown, worked example, and FAQ.
Free tool
Track your double diagonal trades over time
This calculator shows your setup before the trade. The next step is tracking whether your double diagonals are actually profitable over time. Enter your email to get the free Financial Tech Wiz trading journal and all included tools.
- Free trading journal template (Excel and Google Sheets)
- Track win rate, average P&L, and trade history by strategy
- Works with any broker. No app required.
- Invite to the free Financial Tech Wiz Discord
Double diagonal spread — frequently asked questions
A double diagonal spread combines a diagonal call spread and a diagonal put spread on the same underlying. You sell a near-term OTM strangle (short call and short put in the front month) and buy a further-dated OTM strangle at wider strikes (long call and long put in a back month). The strategy profits from time decay on the short options while the long back-month options provide defined risk if the stock moves too far in either direction.
Maximum profit is realized when the stock closes near one of the short strikes at front-month expiration. At that point, the short option on that side expires worthless while the back-month long option still has significant time value. The exact max profit is variable because it depends on the implied volatility of the back-month options at the time the front month expires, making the double diagonal more dynamic than a fixed-expiration strategy.
The maximum loss is limited to the net debit paid to enter the position. This occurs if the stock moves far beyond the long option strikes in either direction, causing the short and long options on that side to mostly cancel each other out with little remaining net value. Because all four legs are defined at entry, there is no way to lose more than the initial debit paid, regardless of how far the stock moves.
Both strategies profit from the stock staying in a range, but they differ in structure. An iron condor uses all four options in the same expiration month and is typically entered for a net credit. A double diagonal sells the inner options in the front month and buys the outer options in a further-dated back month. The different expirations mean the double diagonal benefits from the time decay differential between the two months and gives the trader flexibility to roll the short side after front-month expiration.
A double diagonal works best when you expect the underlying to stay in a defined range through the front-month expiration and when the implied volatility term structure is relatively flat or favorable for selling front-month premium. It is also useful when you want to keep back-month long options alive after the front month expires, allowing you to roll into a new front-month short strangle and turn the trade into a recurring income cycle. High near-term IV makes the short front-month options more valuable and improves the setup.