What is a put diagonal spread strategy?

Selling a put option with one strike price and one expiration and purchasing a second put option with a different strike price and expiration indicates the put diagonal spread strategy. During the deal, spreads can be changed to increase credit.

What is the difference between a diagonal spread and a long spread?

Diagonal spreads are like vertical spreads in the sense that you want them to move in-the-money (ITM). A long diagonal spread is nothing more than a vertical spread with a longer-term long option. With this in mind, max profit can be more than the width of the diagonal spread, since the short option will expire prior to the long option.

What are the benefits of a short diagonal spread?

A potential benefit of a short diagonal spread with puts is that, after the long put expires, the short put remains open and can be “managed” in a number of ways. First, the short put can be left open in the hopes that it will expire worthless.