Ratio Put Spread Strategy
BearishAdvancedRatio Spread
Profit from moderate downward movement while collecting premium, but beware of unlimited downside risk.
How It Works
1
Buy Higher Strike: Purchase fewer puts at higher strike (typically 1 contract).
2
Sell Lower Strikes: Sell more puts at lower strike (typically 2+ contracts).
3
Manage Risk: Monitor for large downward moves that create unlimited risk.
Key Metrics
Max Profit:At lower strike at expiration
Max Loss:Unlimited below lower breakeven
Upper Breakeven:Higher Strike - Net Premium
Lower Breakeven:Lower Strike - Max Profit
Best Case:Stock at lower strike at expiration