Call Ratio Backspread

外汇网2021-06-19 13:47:11 57

A very bullish investment strategy that combines options to create a spad with limited loss potential and mixed profit potential. It is generally created by selling one call option and then using the collected pmium to purchase a greater number of call options at a higher strike price. This strategy has potentially unlimited upside profit because the trader is holding more long call options than short ones.

An investor using this strategy would sell fewer calls at a low strike price and buy more calls at a high strike price. The most common ratios used in this strategy are one short call combined with two long calls, or two short calls combined with three long calls. If this strategy is established at a credit, the trader stands to make a small gain if the price of the underlying decreases dramatically.

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