Chapter 06 · Section 6.1

P/L Profile

How would the profit/loss profile of a put ratio backspread differ from a call ratio backspread?

b) Limited profit would be realized on the downside.
No. The call ratio backspread has limited downside profit potential. Since puts are profitable if the market falls, the combination of two long puts and a short put would have the opposite profit/loss profile as a call ratio backspread.
c) The profit/loss profiles would not differ.