A very bullish investment strategy that combines options to create a spread with limited loss potential and mixed profit potential. It is generally created by selling one call option and then using the collected premium to purchase a greater number of call options at a higher strike price. This strategy has potentially unlimited upside profit because the trader is holding more long call options than short ones.

An investor using this strategy would sell fewer calls at a low strike price and buy more calls at a high strike price. The most common ratios used in this strategy are one short call combined with two long calls, or two short calls combined with three long calls. If this strategy is established at a credit, the trader stands to make a small gain if the price of the underlying decreases dramatically.

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The risk is limited because you have more long call options than short ones.

No, they cannot use leverage when using Call Ratio Backspread .

There are more long calls than short ones.

This strategy combines options to create a spread with limited loss potential and mixed profit potential.

Call Ratio Backspread.

The most common ratios used in this strategy are one short call combined with two long calls, or two short calls combined with three long calls. If established at a credit, the trader stands to make a small gain if the price of underlying decreases dramatically..

It has potentially unlimited upside profit because you hold more long call options than short ones.

Yes, losses can be greater than gains if an investor uses Call Ratio Backspread .

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