Cotnbining Calendar 
and Ratio Spreads 
The previous chapters on spreading introduced the basic types of spreads. The sim­
plest forms of bull spreads, bear spreads, or calendar spreads can often be combined 
to produce a position with a more attractive potential. The butterfly spread, which is 
a combination of a bull spread and a bear spread, is an example of such a combina­
tion. The next three chapters are devoted to describing other combinations of 
spreads, wherein the strategist not only mixes basic strategies ..:... bull, bear, and calen­
dar - but uses varying expiration dates as well. Although they may seem overly com­
plicated at first glance, these combinations are often employed by professionals in the 
field. 
RATIO CALENDAR SPREAD 
The ratio cdendar spread is a combination of the techniques used in the calendar 
and ratio spreads. Recall that one philosophy of the calendar spread strategy was to 
sell the near-term call and buy a longer-term call, with both being out-of-the-money. 
This is a bullish calendar spread. If the underlying stock never advances, the spread­
er loses the entire amount of the relatively small debit that he paid for the spread. 
However, if the stock advances after the near-term call expires worthless, large prof­
its are possible. It was stated that this bullish calendar spread philosophy had a small 
probability of attaining large profits, and that the few profits could easily exceed the 
preponderance of small losses. 
The ratio calendar spread is an attempt to raise the probabilities while allowing 
for large potential profits. In the ratio calendar spread, one sells a number of near-
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