Build a Call Ratio Spread Strategy

What is a call ratio spread?

BullishLimited ProfitUnlimited Loss

The opposite of a call ratio backspread. It is a neutral to slightly bullish strategy with unlimited risk if the stock moves up too much. Time is helpful to this strategy (although you don't want to be exposed for too long), but increasing volatility is harmful.

ABProfitLossStock Price
  • Buy a call at strike A
  • Sell two calls at strike B