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Call Ratio Spread

Bullish Strategy

Use Zuviz's free options visualizer to build this strategy instantly. Buy 1 call, sell 2 (or more) higher calls. Profits on moderate rise to short strike but has unlimited risk on large up moves.

⚡ Key Takeaways

  • Market Outlook: Moderately bullish (limited upside expected)
  • Max Profit: Occurs at short strike price
  • Max Loss: Unlimited (naked calls above breakeven)
  • Breakeven: Upper breakeven varies by ratio (e.g., 1:2, 1:3)
  • Best for: Selling volatility while maintaining upside exposure
  • Greeks Impact: Negative Vega (benefits from IV drop), complex Theta/Delta

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Market Outlook
Moderately Bullish
Max Profit
At short strike
Max Loss
Unlimited (upside)
Breakeven
N/A

📊 Payoff Diagram

Open in Zuviz →

🏗️ Strategy Structure

Leg Action Type Strike Qty Premium
1 Buy Call $100 1 $4.00
2 Sell Call $105 2 $2.00 each

Net Credit/Debit: (2 × $2.00) - $4.00 = $0.00 (breakeven entry)

🧮 Key Calculations

🎯 When to Use This Strategy

  • Expecting moderate rise: Stock will rise to short strike but not beyond
  • Zero cost entry: Can often structure for zero or credit
  • Resistance level: Strong technical resistance at short strike

📈 Greeks Impact

Delta (Δ)

Positive - You want the stock to rise.

Theta (Θ)

Negative (usually) - Time decay hurts long positions, helps short ones.

Vega (ν)

Depends - Long strategies want rising IV, short strategies want falling IV.

⚖️ Pros & Cons

Pros

  • Can run for a credit
  • Profits if stock is flat or rises slightly
  • High probability

Cons

  • Unlimited upside risk
  • Downside risk (if debit)
  • Complexity

📝 Real-World Example

Stock: OXY at $60. Trade: Buy 1x $60 Call, Sell 2x $65 Call.

Risk: Unlimited above break-even point in the upside.

🔗 Related Strategies

📊 Bull Call Spread

Defined risk bullish alternative

📐 Diagonal Spread

Time-based spread variation

Visualize This Strategy

See the payoff diagram in Zuviz.

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