Chapter 06 · Section 6.1

Mechanics of a Ratio Call Spread

To put on a ratio call spread, 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.
  Yes. The premium paid for the low strike call will be partially offset by the premium received for the higher strike calls - resulting in a limited downside loss. Continue
  d) sell two or more of the lower strike and buy one of the higher strike.