A put ratio spread buys one put and sells two lower-strike puts. It is cheap or a credit and profits from a moderate decline — but the extra short put leaves growing risk if the stock falls too far.
Open the Put Ratio Spread calculator →Use it when you are moderately bearish with a downside target near the short strikes, and you do not expect a crash. The short puts pay for the long put, making the trade cheap or free.
The extra short put creates assignment and downside risk, so this is an advanced trade — keep size small and plan an exit if the stock breaks below the short strikes.
Profit peaks if the stock finishes at the short strike: the long put is in the money while the short puts are at or near worthless. Above the long strike you keep any credit or lose only a small debit.
Below the short strike the position becomes net short puts, so losses increase as the stock falls — large, though bounded at a zero stock price.
Use the free OptionProfit Put Ratio Spread 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.
Moderately bearish — it profits most from a decline toward the short strike, but a very large drop hurts it because of the extra short put.
Below the short strikes you are net short puts, so losses grow as the stock falls (bounded only at a zero stock price) and you may be assigned shares.
Often yes — two short puts usually bring in more than the single long put costs, giving a small starting credit.
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