# Futures Options Diagonal Spread Strategy AI Agent Connect

> A deterministic decision engine for executing futures options diagonal spread strategies.

## Overview
- **Category:** finance
- **Price:** Free
- **Endpoint:** https://edge.vinkius.com/vk_preview_qq3FH1VdAGwPM38NG33FXocs56SYTJR9usmIz9ta/ai-agent-connect
- **Tags:** futures, options, diagonal-spread, volatility, theta

## Description

This MCP server provides a specialized decision engine for executing diagonal spread strategies using futures options. It targets the exploitation of volatility skew and time decay differentials by analyzing the relationship between near-term and far-term options. Users can use `analyze_diagonal_spread` to generate BUY, SELL, or HOLD signals based on implied volatility, delta exposure, and liquidity. The engine also provides `calculate_position_metrics` for detailed risk/reward analysis and `validate_liquidity_and_risk` to ensure trades meet strict gamma and open interest safety thresholds.

## Tools

### analyze_diagonal_spread
Evaluates a specific diagonal spread setup to determine if a trade signal (BUY, SELL, or HOLD) should be generated

### calculate_position_metrics
Calculates the mathematical risk and reward components of a proposed diagonal spread

### validate_liquidity_and_risk
Verifies if the specific contract parameters meet the safety and liquidity requirements for trading

## Prompt Examples

**Prompt:** 
```
Analyze this diagonal spread: call option, near-term strike 4500, far-term strike 4450, near-term premium 150, far-term premium 300, near-term delta 0.3, far-term delta 0.5, near-term IV 40, far-term IV 30, near-term days 30, far-term days 60, near-term OI 500, far-term OI 500.
```

**Response:** 
```
Signal: BUY. Near-term Strike: 4500, Far-term Strike: 4450, Debit: 150, Delta Exposure: 0.2, Max Profit: 300, Max Loss: 150.
```

**Prompt:** 
```
Calculate the risk metrics for a put diagonal spread with near-term strike 4200, far-term strike 4300, near-term premium 80, far-term premium 200, near-term delta -0.2, far-term delta -0.4.
```

**Response:** 
```
Diagonal Spread Debit: 120, Delta Exposure: -0.2, Max Profit: 180, Max Loss: 120, Theta Benefit: 12.5.
```

**Prompt:** 
```
Check if this trade is safe: near-term OI 100, far-term OI 500, near-term days 10.
```

**Response:** 
```
Trade rejected: Insufficient liquidity (near-term OI below 300) and high gamma risk (near-term days below 14).
```

## Frequently Asked Questions

**What is a diagonal spread?**
A diagonal spread is an options strategy involving the simultaneous purchase and sale of options with different strike prices and different expiration dates.

**How does the engine determine a BUY signal?**
A BUY signal is generated via `analyze_diagonal_spread` when near-term IV is higher than far-term IV, near-term expiration is between 14 and 45 days, both options have sufficient Open Interest, and the debit is cost-effective.

**What is the purpose of the liquidity check?**
The `validate_liquidity_and_risk` tool ensures that the options have enough Open Interest (above 300) to avoid slippage and that the position is not exposed to excessive gamma risk.