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The Liz & Jenny Strategy Workshop

Strategy Workshop: Put Ratio Spread

The Liz & Jenny Strategy Workshop

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

In this strategy workshop, Liz and Jenny explain the basics of a Put Ratio Spread. This spread consists of a Long Put Option and two Short, further Out of The Money (OTM) Put Options at a lower strike. Executing this trade for a credit eliminates risk to the upside.

We place Put Ratio Spreads in liquid stocks that also have a high Implied Volatility Rank (IVR). This allows us to collect a larger credit, as the option prices are inflated. Generally, we consider anything with an implied volatility rank of over 50% to be high.

This is a neutral to slightly bearish strategy, and maximum profit is achieved when the price of the stock "pins" at our short Put strike.

See more on this strategy here

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