Explanation
A trader implements this strategy when he holds a neutral to somewhat bearish stance on the near-month expiry of the underlying but bearish on the long term, he will apply Diagonal Bear Put Spread. The strategy involves buying higher strike price (OTM) long-term puts in next month / far month expiry and simultaneously shorting an equal number of near-month (ITM) puts of the same underlying stock with a lower strike. The strategy bags limited rewards with limited risk.
Risk
Limited
Reward
Limited
Construction
Sell 1 near-Month OTM Put Option
Buy 1 next-Month ITM Put Option
| Option Type | Expiry Date | Strike Price | LTP | Action | No. Of Lots |
| PUT | 27/04/2023 | 16900.0 | 203 | Buy | 2 |
| PUT | 25/05/2023 | 17100.0 | 361 | Sell | 1 |
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