A diagonal calendar call spread which is constructed by selling a long-term at-the-money call option and buying a short-term out-of-the-money call option. For example, an investor may sell a January 50 call option at $4.5 and buy a December 53 call option at $4.2, making a net credit of (4.5-4.2= 0.3). This spread makes its maximum profit potential when the underlying breaks out downward to the extent that the extrinsic value of the long-term option is totally wiped out. The maximum profit is limited to the net credit amount. And if the underlying happens to remain stagnant, or if it rises to the strike price of the out-of-the-money option, the spread incurs losses.

The breakeven point of a short diagonal calendar spread marks the price level below and above which the position will turn out to produce gains.

The short diagonal calendar call spread is also known as a short calendar diagonal call spread.