Option Strategy- Call Ratio Back Spread

Bull Call Spread

Market View:

Very Bullish and Maket will move either direction

Implementation:

Sell 1 ITM Call options and Buy 2 OTM Call options

  • Sell 1 ITM call option (Leg 1- LS High premium)
  • Buy 2 OTM call option (leg 2 - HS Low Premium)

Key trigger points:

  • Spread = Difference between the strikes
  • Net Credit = Premium Received for ITM LS - 2* Premium paid for of OTM HS
  • The payoff when market goes down = Net Credit (at or below LS)
  • Max Loss = Spread - Net Credit (at HS)
  • Lower Breakeven = Lower Strike + Net Credit
  • Upper Breakeven = Higher Strike + Max Loss

Calculation for Call Ratio Back Spread

  • Spread =
  • Net Credit =
  • Max Profit(when market is down) =
  • Max Profit (when market is up) = Unlimited
  • Max Loss =
  • Lower Breakeven =
  • Upper Breakeven =
  • Max Profit(when market is down) : Max Loss =
Calculation for lots
  • Sell Lots =
  • Buy Lots =
  • Total Net Credit =
  • Total Profit when market is down =
  • Total Profit when market is up = Unlimited
  • Total Max Loss =