Option Trading Strategies – Call Ratio BackSpread Strategy

Published on December 30, 2018

Option Trading Strategies – Call Ratio BackSpread Strategy

I have begun with basics of Call Ratio Backspread strategy and have explained this in detail by taking Real Option Chain for Nifty 50. Bull Call ratio back spread is a Three leg strategy which traditionally involves buying 2 OTM Call Option and Writing 1 ITM Call option. Call Ratio Backspread is a strategy that is executed when outlook of Option Trader is extremely bullish for the underlying Stock or Index.

Bull Call Ratio Back spread is created by Buying 2 OTM Call Option and then simultaneously selling (writing) 1 In the money call option. I have covered Breakeven point, Risk Profile and Option Strategy payoff chart and maximum risk that is associated in this option strategy. I have also shown why this Trading strategy has more odds to succeed and why Options trader should pay attention to this strategy.

In the end, I have explained the ideal conditions and events when one should think of executing this Option trading strategy and I have listed out steps Option trader should follow in selecting and executing various Option trading strategies that I am discussing in this Option trading series.

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