# Call Ratio Backspread

The Call Ratio Backspread strategy involves selling and buying call options in a specific ratio.

The Call Ratio Backspread is a somewhat advanced options trading strategy, primarily suited for traders who anticipate a significant move upwards in the price of an underlying asset. This strategy involves selling and buying call options in a specific ratio, typically selling one call option and buying two (or more) call options at a higher strike price.

**How It Works:**

**Sell a Call Option:**The trader sells a call option with a particular strike price.**Buy Call Options:**The trader buys more than one call option (usually two) at a higher strike price, both with the same expiration as the sold call.

**Potential Profit and Loss:**

**Maximum Profit:**Unlimited. The profit grows as the underlying asset's price rises.**Maximum Loss:**Limited to the difference between the premiums paid and received. It occurs if the price of the underlying closes at the strike price of the call options purchased.

**Benefits:**

**Profit from Large Upward Move:**This strategy can be very profitable if the underlying asset sees a significant increase in price.**Break-even Point:**Achieved when the underlying asset price equals the lower strike price plus the net cost of the spread.

**Drawbacks:**

**Risk of Small Upward Moves:**If the underlying asset has a moderate rise, settling between the two strike prices, it can result in a maximum loss.**Complexity:**It's a more complex strategy than basic option strategies, and may not be suitable for beginners.

**Example:**

Imagine a stock Nifty is trading at ₹19,996:

- Sell 1 20000 call option for a premium of ₹365.
- Buy 2 20300 call options at a premium of ₹197 each.

Net cost: ₹29 (since you receive ₹365 and spend ₹394).

If Nifty rises significantly above ₹20,600, the profit potential is unlimited. If Nifty stays below ₹20000, the options expire worthless, and there's loss of ₹29 (net cost). However, if Nifty closes at ₹20,300 at expiration, the trader incurs the maximum loss of ₹327 (strike difference plus cost), which in this case would be the cost of the spread.

In conclusion, the Call Ratio Backspread is a strategy for the bullish trader who believes there's a chance of a strong upward move. It offers unlimited upside potential with a defined maximum risk, but requires a careful understanding of its risk-return profile.

### Other Strategies

## Iron Condor

A strategy designed to profit from low volatility in the underlying asset, combining a bullish put credit spread and a bearish call credit spread to it.

## Iron Butterfly

This is a strategy which profits from low volatility in the price of the underlying asset while minimizing risk.

## Short Strangle

A short strangle is a non directional trading strategy where an investor sells an (OTM) call option and put option on the same underlying asset simultaneously.

## Short Straddle

A Short straddle is considered neutral or non-directional because it profits from minimal price movement in the underlying asset.

## Put Ratio Backspread

The Put Ratio Backspread strategy involves selling and buying put options in a specific ratio.

## Bear Call Spread

A Bear Call Spread is an options trading strategy that's used when a trader believes the price of an underlying asset will go down, but not significantly.

## Bear Put Spread

A Bear Put Spread is a type of vertical spread strategy used in options trading.

## Long Put

Long Put option is the most basic & simplest strategy. It is recommended or implemented when we expect the underlying asset to show significant downside move.

## Short Call

Short Call strategy is employed in a bearish or neutral market outlook, where the underlying asset's price is expected to remain stable or fall.

## Call Ratio Backspread

The Call Ratio Backspread strategy involves selling and buying call options in a specific ratio.

## Bull Put Spread

A Bull Put Spread is a type of vertical spread strategy used in options trading

## Bull Call Spread

A Bull Call Spread is an options trading strategy that's used when a trader believes the price of an underlying asset will go up, but not significantly.

## Short Put

Short Put strategy is employed in a bullish or neutral market outlook, where the investor believes that the underlying asset's price will remain stable or rise.

## Long Call

Long Call option' is the most basic & simplest strategy. It is recommended or implemented when we expect the underlying asset to show significant upside move.