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Ratio backspread
A spread in which the number of short options represents a fraction of the number of long options, the long options having the same maturity but a higher exercise price in the case of call options, or a lower exercise price in the case of put options, than that of the options sold.
For example, in a call ratio backspread or call backspread, or in a put ratio backspread or put backspread, with a one-to-two ratio, the purchase of two out-of-the-money options is financed by the sale of one option that is in the money or closer to the money.
Translations
Synonyms and variations
- Back spread
- Backspread
- Call backspread
- Call ratio backspread
- Put backspread
- Put ratio backspread
- Ratio back spread