Chapter 06 · Section 6.1

The Call Ratio Backspread

1. 1Butterfly Call Spreads→
2. 2Spread Position→
3. 3Mechanics of a call ratio backspread→
4. 4Potential gains→
5. 5Implied Volatility→
6. 62:1 Spread Ratio→
7. 7Breakeven Point→

Throughout this chapter, we will be looking at a number of "ratio spreads. "These spreads take their name from the fact that options are combined in ratios of typically 1:2 or 1:3. Ratio spreads are in a class of options strategies known as precision strategies.