Ratio Call Spread option strategy
Call Ratio Spread is Neutral to Mildly bullish Strategy. In this we expect stock to remain below upper breakeven point.
Payoff at expiry
Nifty, lot size 65 · Nifty future 25,151 · 17 Nov 2026Legs
| Action | Option | Strike | Lots | Qty | Premium |
|---|---|---|---|---|---|
| BUY | ATM Call | 25,150 | 1 | 65 | ₹113.32 |
| SELL | OTM Call | 25,200 | 2 | 130 | ₹90.13 |
How it works
- Buy 1 ATM call at the 25,150 strike for ₹113.32, paying the premium.
- Sell 2 OTM calls at the 25,200 strike for ₹90.13 each, collecting the premium.
- You receive a net ₹4,351 upfront for the position. Your maximum profit is ₹7,601.
Below 25,317 you profit, up to ₹7,523.
Above 25,317 you lose, and the loss keeps growing as Nifty rises.
Set-up: Buy 1 lot ATM call and Sell 2 lots OTM Calls with same expiration date.
What happens if Nifty moves
Profit or loss at expiry| Nifty at expiry | Move | Profit / loss |
|---|---|---|
| 23,650 | −6% | +₹4,351 |
| 24,400 | −3% | +₹4,351 |
| 24,900 | −1% | +₹4,351 |
| 25,150 | Unchanged | +₹4,351 |
| 25,400 | +1% | −₹5,399 |
| 25,900 | +3% | −₹37,899 |
| 26,650 | +6% | −₹86,649 |
How the Greeks affect it
When to use
When you expect decrease in volatility with stock price remaining range bound.
- Net credit received act as a cushion for any downside movement in stock.
- Profitable when stock remains range bound between two strikes as it has higher theta gain.
Things to watch
- Uncapped risk if stock rises above higher BEP.
- Managing the trade if stock rises too fast too early.
- Comparatively complicated trade for intermediate trader.
Ratio Call Spread: backtested on NSE data
Real backtests of this structure on NSE data, each with its exact rules, a year of results before and after costs, and where it made and lost money.
Backtest popular strategies →Ratio Call Spread: questions
What is a Ratio Call Spread strategy?
Call Ratio Spread is Neutral to Mildly bullish Strategy. In this we expect stock to remain below upper breakeven point.
When should you use a Ratio Call Spread?
When you expect decrease in volatility with stock price remaining range bound.
How do you set up a Ratio Call Spread?
Buy 1 lot ATM call and Sell 2 lots OTM Calls with same expiration date.
What is the maximum profit of a Ratio Call Spread?
Maximum Profit limited to difference between the strikes plus( the net credit received) or minus( net debit paid) all multiplied by net long contracts.
What is the maximum loss of a Ratio Call Spread?
Maximum Loss is unlimited above higher breakeven point as you are short more option then being long.
What is the breakeven of a Ratio Call Spread?
With Nifty at 25,151, the example on this page breaks even at 25,317 at expiry.