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Ratio spread
A spread in which the number of long options represents a fraction of the number of short options, the short 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 purchased.
For example, in a call ratio spread or ratio call spread, or in a put ratio spread or ratio put spread, with a two-to-one ratio, the sale of two out-of-the-money options finances the purchase of one option that is in the money or closer to the money.
Translations
Synonyms and variations
- Call ratio spread
- Put ratio spread
- Ratio call spread
- Ratio put spread
- Ratio vertical spread