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+688 Part V: Index Options and Futures 
+Later, one can use the dollars per point to obtain actual dollar cost. Dollars per point 
+would be $50 for soybeans options, $100 for stock or index options, $400 for live cat­
+tle options, $375 for coffee options, $1,120 for sugar options, etc. In this way, one 
+does not have to get hung up in the nomenclature of the futures contract; he can 
+approach everything in the same fashion for purposes of analyzing the position. He 
+will, of course, have to use proper nomenclature to enter the order, but that comes 
+after the analysis is done. 
+RATIO SPREADING THE CALLS 
+Returning to the subject at hand - spreads that capture this particular mispricing 
+phenomenon of futures options - recall that the other strategy that is attractive in 
+such situations is the ratio call spread. It is established with the maximum profit 
+potential being somewhat above the current futures price, since the calls that are 
+being sold are out-of-the-money. 
+Example: Again using the January soybean options of the previous few examples, 
+suppose that one establishes the following ratio call spread. Using the calls' deltas 
+(see Table 34-2), the following ratio is approximately neutral to begin with: 
+Buy 2 January bean 600 calls at 11 
+Sell 5 January bean 650 calls at 31/2 
+Net position: 
+22 DB 
+171/2 CR 
+41/2 Debit 
+Figure 34-2 shows the profit potential of the ratio call spread. It looks fairly typ­
+ical for a ratio spread: limited downside exposure, maximum profit potential at the 
+strike of the written calls, and unlimited upside exposure. 
+Since this spread is established with both options out-of-the-money, one needs 
+some upward movement by January soybean futures in order to be profitable. 
+However, too much movement would not be welcomed (although follow-up strate­
+gies could be used to deal with that). Consequently, this is a moderately bullish strat­
+egy; one should feel that the underlying futures have a chance to move somewhat 
+higher before expiration. 
+Again, the analyst should treat this position in terms of points, not dollars or 
+cents of soybean movement, in order to calculate the significant profit and loss 
+points. Refer to Chapter 11 on ratio call spreads for the original explanation of these 
+formulae for ratio call spreads: 
+Maximum downside loss = Initial debit or credit 
+= -4½ (it is a debit)