O'Reilly logo

The Bible of Options Strategies: The Definitive Guide for Practical Trading Strategies by Guy Cohen

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Chapter 6. Leveraged Strategies

Introduction

By leveraged strategies, we mean the ratio backspreads and ratio spreads. These are strategies where your profits (or losses) are increasingly leveraged because of the different number of options you're buying or selling as part of the strategy.

In this chapter we're only reviewing four strategies. The ratio backspreads involve buying more options than selling, so there is uncapped upside at an accelerated rate. The ratio spreads involve selling more options than buying, so there is uncapped downside at an accelerated rate. No prizes for guessing which type is preferable!

If we're to concentrate on the ratio backspreads, we'll quickly discover that they give us limited risk and unlimited reward potential ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required