What is a Bearish Diagonal Call Spread?
Bearish Diagonal Call spread is neutral to bearish strategy which is executed by buying long-dated in the money call option and concurrently selling short-dated out of the money call option.
In Nifty futures on monday morning price opened with a big gap down and trading 500 points lower and also broken the recent trendline levels and the immediate trading sentiment turned negative.
The objective is to trade a short term setup for the expiry with a reasonable risk reward ratio especially in a fearful and rising volatile environment.
Bear Call diagonal spread creation
Short 1 lot of 9300CE – Current week expiry @ 188/lot
Long 1 lot of 9400CE – next week expiry @ 232/lot
Breakeven levels are at 8860 – 9578 levels and the strategy also has limited risk and limited reward style which suits execution especially after a big gap down day where you have to come up with controlled thinking.
What if Scenario on 7th May 2019 Expiry
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