OPTIONS : Long-term Diagonal Call Spreads or Put Spreads

Options come with risk so this is for those who are willing to accept risk and try to make more money than just buying stocks alone.

Here is the set up for a DIAGONAL CALL SPREAD:
Outlook - Bullish
Options -
1. Long ITM 12 month call (10% ITM)*
2. Short ATM** or OTM*** 3 month call
*ITM = In The Money
**ATM = At The Money
***OTM = Out of The Money
Reasoning - Profit from rally in market when IV is higher than SV. If market rallies strongly, roll the short call out 3 more months at the same strike. If market closes below short call, resell new 3 month at the same strike as the first short call.
Set up - ADX cross MDI. Better if breaking out from a base and market in a rally.
Trade - SPY, DIA, QQQQ, or growth stocks.

Now for the opposite.

Here is the set up for a DIAGONAL PUT SPREAD:
Outlook - Bearish
Options -
1. Long ITM 12 month put (10% ITM)*
2. Short ATM** or OTM*** 3 month put
*ITM = In The Money **ATM = At The Money ***OTM = Out of The Money
Reasoning - Profit from a falling market when IV is lower than SV. If market falls rapidly, roll the short put out 3 more months at the same strike. If market closes above short put, resell new 3 month at the same strike as the first short put.
Set up - ADX cross PDI. Better if breaking out from a base and market in a rally.
Trade - SPY, DIA, QQQQ, or growth stocks.