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Chapter 6. Leveraged Strategies > Ratio Call Spread

6.3. Ratio Call Spread

ProficiencyDirectionVolatilityAsset LegsMax RiskMax RewardStrategy Type
+
    +   
ExpertBearishLow• Long Call[*]UncappedCappedIncome
   • Two Short Calls   


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

6.3.1. Description

The Ratio Call Spread is the opposite of a Call Ratio Backspread in that we're net short options. This means we're exposed to uncapped risk and can only make a limited reward. As such, this is an undesirable strategy, and you'd be better off trading one of the long butterflies.


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