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Chapter 6. Leveraged Strategies > Call Ratio Backspread

6.1. Call Ratio Backspread

ProficiencyDirectionVolatilityAsset LegsMax RiskMax RewardStrategy Type
+
    +   
AdvancedBullishHigh• Short Call[*]CappedUncappedCapital Gain
   • Two Long Calls   


[*] Or can be two short calls with three long calls.

6.1.1. Description

The Call Ratio Backspread is an exciting strategy that enables us to make accelerated profits provided that the stock moves sharply upwards. Increasing volatility is very helpful because we're net long in calls. The worst thing that can happen is that the stock doesn't move at all, and even a sharp move down can be profitable, or at the very least, preferable to no movement at all.


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