Ratios
Ratios involve buying or selling a greater number of calls or puts on one side of the transaction than the other. They are basically a combination of strategies already discussed and are useful in certain situations.
Ratio writes
Simply stated, a ratio write involves selling a greater number of options than the underlying futures position, with the most common being 2.
![]() | For example, it's September 15 and you buy December cotton at 8055, and you simultaneously sell two December 86 calls for a premium of 130 each. You are taking in 260 points in premium. (For cotton, one point is worth $5.) Therefore, this strategy gives you $1,300 in downside ... |
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