A call backspread sells one call and buys two higher calls. It profits from a strong rally with unlimited upside, often costs little or nothing to open, and has limited, defined risk if the stock stalls in a middle zone.
Open the Call Ratio Backspread calculator →Use it when you expect a large upside move — for example before a catalyst — but want to risk little if you are wrong and the stock barely moves. It is a long-volatility, bullish trade.
It is most attractive when you can put it on for a credit, so a flat-to-down stock simply leaves you keeping that credit.
Below the short strike everything expires worthless and you keep any credit. The worst case is a stock that finishes right at the long strike, where the single short call is in the money but the long calls have little value — that is the defined maximum loss.
Above the long strike the two long calls outrun the single short call, so profit grows without limit as the stock rallies.
Use the free OptionProfit Call Ratio Backspread calculator to load a live option chain, build the trade, and instantly see the payoff chart, breakevens, probability of profit, Greeks and a Monte Carlo simulation of outcomes.
On a large up-move: the two long calls more than offset the single short call, so profit is unlimited above the long strike. A flat-to-down stock leaves you keeping any credit.
It is limited and occurs if the stock finishes at the long strike at expiration, where the short call is in the money but the long calls are nearly worthless.
A ratio spread is net short extra options (uncapped risk on a big move); a backspread is net long extra options (uncapped profit on a big move, limited risk).
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