I have been trading options for the last two years and have recently started employing a reverse diagonal spread strategy in sim mode. In my virtual trading, I have been quite successful and am thinking of employing it live. What are the drawbacks of this strategy. An example for all to comment on follows: XYZ Current Share Price: $100 Buy 500 Jan $130 Calls @ $0.82 Implied Vol: 57.5 Sell 500 March $155 Calls @ $0.86 Implied Vol: 52.6 Typical Volatility is low 40's,upper 30's. Earnings are to be announced in December. The trade (excluding commissions) nets an initial credit of $2,000. ($43,000 versus -$41,000) It appears that there is limited downside risk and incredible upside benefit, especially with a blowout earnings report. If you were to have an exit date of between 12/24 and end of the month, it is hard to see how you could lose much, especially when considering the upside potential. Thoughts?