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Buy 1 At The Money Call, Sell 2 Or More Out Of The Money Calls.

Use the Call Ratio Spread when you expect the market to make a slight up move but there is

potential for the market to make a significant down move.  The objective is to put this trade on as a

credit, a free trade or at least very cheap.

If the trade is done as a credit the profit is limited on the down side to the premium collected.  Profit

on the up side is limited to the difference between the long and short calls.

If the market expires below the long call, your risk is limited to any premium paid for the spread. 

Holding more short calls than long, the upside risk is unlimited above the short calls.

Since this strategy has unlimited risk, this trade obviously needs to be watched closely.

Futures Traders Helping Future Traders