A diagonal calendar spread (or a calendar diagonal spread) which constitutes an option trading strategy based on the selling of a near-month out-of-the-money put and the buying of a far-month at-the-money put at different strike prices. Differently stated, this strategy is a time spread that is based only on put options.

It is usually followed by investors/ spread betters who expect the underlying to remain unchanged or go down slightly over the short term. However, it is particularly recommended that a long term put option position is maintained as a precaution against future downside breakouts. The upside profit from this spread is limited, though higher profits can be expected when the underlying moves moderately lower. Likewise, its potential losses are limited to the net debit paid (in the case the underlying moves up substantially).

The put diagonal calendar spread is alternatively called a diagonal calendar put spread, a calendar diagonal put spread and a diagonal calendar put spread.