Ratio Spreads
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| Ratio spreads are an evolution of the bull call or bear put spread. They combine long purchased options with multiple short options. | ||
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Additional Comments:
Ratio spreads bring an additional short option premium to purchased options to reduce the premium outlay, protect against time value decay, and insulate long options from significant reductions in implied volatility.
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Related Terms: | ||
Back Spread A back spread is essentially an inverted ratio spread.When constructing a back spread, you are selling ... Double Diagonals Double diagonals are a favorite among professional index option traders.The double diagonal capitalizes perfectly on the ... Ratio Backspread A strategy using all puts or all calls whereby the trader buys OTM options in a ... | ||
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