Chapter 06 · Section 6.1

Mechanics of a call ratio backspread

To put on a call ratio backspread, you:

a) sell one of the lower strike and buy two or more of the higher strike.
• b) buy two or more of the lower strike and sell one of the higher strike.
  No. The call ratio backspread is the opposite of the ratio call spread. Recall that that spread was constructed by buying a call at a low strike and selling two or more at a low strike.
  c) buy one of the lower strike and sell two or more of the higher strike.
  d) sell two or more of the lower strike and buy one of the higher strike.