Copyright (c) 2009, Commodity Trading School, All Rights Reserved! Option Strategy #6: Call Ratio Back Spread Sell 1 At The Money Call, Buy 2 Or More Out Of The Money Calls Use the Call Ratio Back Spread when you expect the market to make a substantial up move after a period of stagnation; the objective is to put the trade on as a credit, a free trade or at least very cheap. If this trade is done as a credit the profit is limited on the downside to the premium collected, while the profit on the upside is unlimited. The risk is limited to the difference between the short & long option +/- the net premium.  If the market expires below the short call, your risk is limited to any premium paid for the spread. At expiration, the maximum loss is realized if the market is trading at the long calls strike price.  Being partially right is when the worst case scenario is realized. In this strategy, you want to be either very right, or completely wrong. Futures Traders Helping Future Traders