Diagonal Spread with Puts Option Strategy

This strategy is used to profit from neutral stock price action at the strike price. It also limits the risk in the downside direction of the strike price and limited profit potential on the upside. The maximum gain happens when the options expire at the strike price of the Puts. The strategy is implemented by: * Going short on the near term put option * Going long on the far-term put option Note that the strike price of a Long Put should be higher than Short Put.