Chapter 06 · Section 6.1

Ratio Call Spread

You know that ratio spreads get their name from the fact that you buy/sell the options in ratios of 1:2 or 1:3.

What is the ratio used in the spread shown on your left?

b) Long two low exercise, Short one high exercise.
No. Look at the profit/loss profile. In order to have unlimited loss on the upside, the short calls must outweigh the long calls.