Add training workflow, datasets, and runbook
This commit is contained in:
@@ -0,0 +1,23 @@
|
||||
Ratio Spreads Using Puts
|
||||
The put option spreader may want to sell more puts than he owns. This creates a ratio
|
||||
spread. Basically, two types of put ratio spreads may prove to be attractive: the stan
|
||||
dard ratio put spread and the ratio calendar spread using puts. Both strategies are
|
||||
designed for the more aggressive investor; when operated properly, both can present
|
||||
attractive reward opportunities.
|
||||
THE RATIO PUT SPREAD
|
||||
This strategy is designed for a neutral to slightly bearish outlook on the underlying
|
||||
stock. In a ratio put spread, one buys a number of puts at a higher strike and sells
|
||||
more puts at a lower strike. This position involves naked puts, since one is short more
|
||||
puts than he is long. There is limited upside risk in the position, but the downside risk
|
||||
can be very large. The maximum profit can be obtained if the stock is exactly at the
|
||||
striking price of the written puts at expiration.
|
||||
Example: Given the following:
|
||||
XYZ common, 50;
|
||||
XYZ January 45 put, 2; and
|
||||
XYZ January 50 put, 4.
|
||||
A ratio put spread might be established by buying one January 50 put and simulta
|
||||
neously selling two January 45 puts. Since one would be paying $400 for the pur
|
||||
chased put and would be collecting $400 from the sale of the two out-of-the-money
|
||||
puts, the spread could be done for even money. There is no upside risk in this posi
|
||||
tion. If XYZ should rally and be above 50 at January expiration, all the puts would
|
||||
358
|
||||
Reference in New Issue
Block a user