Double Diagonal Calculator

A double diagonal sells a near-term strangle, a put below and a call above the price, and buys a longer-dated strangle further out as wings. It is an iron condor whose wings expire later than its body. The later wings keep value when the near strangle expires, which widens the profit zone and adds a benefit from rising implied volatility that a condor lacks.

When it is used

Traders use it when they expect a stock to stay in a range for the near term and either do not want to be short volatility outright or expect volatility to rise into a later event. It is more capital-intensive than a condor because the long wings cost more, and it needs management when the short strangle expires.

How it makes and loses money

Time decay on the short strangle is the engine while the stock stays between the short strikes. A large move costs money, but less than it would for a condor, because the longer-dated wings respond to the move and to the volatility rise that comes with it. Falling implied volatility hurts the wings.

What to check in the grid

Look at the column on the short strangle's expiry: a broad profit plateau between the short strikes. Then look at the columns after it, where only the long strangle remains. The pinned-cell detail shows how much of the value sits in the wings on any date.