Bull Call Ratio Backspread vs Call Option
Call Ratio Backspread
- Bull Call Ratio Backspread
- Bull Call Ratio Backspread Profit, Loss, & Breakeven
- Bull Call Ratio Backspread vs Buying a Call
Both the profit/loss graph at expiration for the Bull Call Ratio Backspread and a call option are given below.
Break-even
The call is superior than the bull call ratio backspread when it comes to the better upside breakeven.
- Bull Call Ratio Backspread = $54.67
- Call = $53.10
Profit
The profit for a bull call ratio backspread is less than a call. The profit at a stock price of $55 is given below :
- Bull Call Ratio Backspread = $33
- Call = $190
Loss
At a stock price of $50 (i.e. stock didn't move in 30 days) the bull call ratio backspread actually makes money, whereas the call loses money:
- Bull Call Ratio Backspread = $33
- Call = -$60
However, at a price of $52.50, the bull call ratio backspread is very inferior to the call.
- Bull Call Ratio Backspread = -$217
- Call = -$60
Like all option strategies, the trader's exact expectations have to be considered when deciding the best strategy to use:
- Direction of stock move
- Magnitude (size) of stock move
- Time frame of stock move