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A spread where more options (calls or puts) are bought than sold (the opposite of a Ratio Spread).

Additional Comments:

In low-volatility periods a back spread may be highly effective, but be aware of total movement of the spread. Indices may not have the effective range that an individual stock or commodity may have because of the diversification.

The back spread requires a fairly substantial price change to be effective, so it is important to consider the back spread as very long term and try to place the spread within the range of reasonable annual return for the index.

Related Terms:

Back Spread
A back spread is essentially an inverted ratio spread.When constructing a back spread, you are selling ...

Vertical spread
A spread in which one option is bought and one option is sold, where the options ...

Double Diagonals
Double diagonals are a favorite among professional index option traders.The double diagonal capitalizes perfectly on the ...

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