Chapter 06 · Section 6.1

Mechanics of a Put Ratio Backspread

To put on a put 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.
• c) buy one of the lower strike and sell two or more of the higher strike.
  No. Answer (c) will give you a position which resembles a bull spread.
  d) sell two or more of the lower strike and buy one of the higher strike.