|
Direction |
Bearish |
|
Strategy Type |
Income |
|
Legs |
Buy 1 ITM Call
Sell 2 OTM Calls |
| |
|
|
Max Reward |
Capped |
|
Max Risk |
Unlimited |
|
Time Horizon |
Short to medium |
|
Risk Profile |
High |
|
|
|
Description
The ratio call spread is the opposite of a call ratio back-spread as we are long one call and short two. We are therefore exposed to an unlimited amount of risk. As a result, this is usually an undesired strategy and often a butterfly spread is selected instead.
Steps Involved
Buy one call
Sell two calls