A ratio spread is a strategy used in options trading, in which a trader will hold an unequal number of buy and sell options positions on a single underlying asset at once.
The ratio spread strategy is a variation of the option spreads strategy. The difference between the two is in the ratio of buy to sell positions: in a ratio spread the ratio is always unequal, in an option spread they are equal.
Ratio spreads are most likely to return a profit in the following situations:
- When the options being used are falling in implied volatility
- When the underlying asset’s price moves steadily in the trader’s favour
We offer a wide range of options which can be used for a ratio spread.