Introductory Context
"An advanced masterclass on trading Diagonal Call Spreads on NSE large-caps: buying a deep ITM far-month Call and selling an OTM near-month Call."
Strategy Dossier & Metadata Taxonomy
Strategy: Diagonal Call Spread (Poor Man's Covered Call) | Market: NSE F&O | Structure: Long Far-Month ITM Call + Short Near-Month OTM Call
1. The Core Principle in Plain English
A Diagonal Call Spread (commonly known as the Poor Man's Covered Call) replicates a traditional Covered Call at a fraction of the capital cost.
Instead of purchasing expensive delivery shares, you buy a deep In-The-Money (0.80 Delta) Call option in a far-month expiry, and systematically sell monthly OTM Calls against it to generate recurring rental income.