Proficiency | Direction | Volatility | Asset Legs | Max Risk | Max Reward | Strategy Type | ||
---|---|---|---|---|---|---|---|---|
+ | ||||||||
+ | ||||||||
Advanced | Bullish | High | • Short Call[*] | Capped | Uncapped | Capital Gain | ||
• Two Long Calls |
[*] Or can be two short calls with three long calls.
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.