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Managing Ratio Spreads

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Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Ratio spreads are a high probability, directional trade that involve buying and selling two options of the same type. For example, a put ratio spread is constructed by buying one put option and selling two further out of the money put options. Given this ratio of long to short options, the ratio spread has a unique risk graph with two distinct profit zones. Tune in as Tom and Tony discuss Ratio Spread mechanics and their different management mechanics.

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