Best Practices

Weekdays 8:00 – 8:20a CT

Ratio Spreads

Best Practices

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

Today, we walked through the ways to construct and manage ratio spreads, which are delta biased and have a relatively high Probability of Profit.

A put (call) ratio consists a long position in an ATM or OTM put (call) option and a short position in two further OTM put (call) options at a lower (higher) strike.

The max profit of selling a put (call) ratio is equal to the width of the spread plus the credit we received. And we can manage the put (call) ratios at their whole credit or 25% of the max profit.

Best Practices More installments

See All »

Latest tastytrade Videos As of September 20

Most Shared From the last 30 days