Put Ratio Spread Strategy Tutorial | Options Trading Concepts

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[tigres]

2020 still watching MIKE n his WB. Video has so much information, and it Never gets old.

[SheshagiriPai]

I have found this strategy to work in any IV environment. Having a higher ratio and higher spread gives lot of maneuverability to roll the short and add/remove the long puts.

[jimmyvergakis]

Thanks Mike ! For sharing your knowledge. Very helpful in my option trading learning process.

[forspotshooter]

Excellent. Works beautifully as another tool in the tool kit.

Great tutorial.

[brainkill]

Fantastic explanation! Thank you for sharing.

[asapusrinivas]

Thanks for explaining in easily understandable way

[nicolastorres]

Great video, Mike. Since the value of the spread can be either positive or negative, where
Spread Value = Long Value - Total Short Value,
would closing the trade be known as BUYING BACK the spread or SELLING TO CLOSE the spread? Thx.

[ShoresOfHelll]

Amazing video. Have seen it a couple of times.

[ShoresOfHelll]

Do u have a video on put backratio. Being bullish Selling 1x ITM put and buying 2x OTM puts? pls let me know. Thanks 🙏

[daxschreck]

Very interesting...
What if you set that up for Call AND Put side? How do you call that? Ratio Condor?

In theory, you should profit on any movements or no movements at all - only movements too big would hurt you. IV increase could hurt, too.

[tman]

I've created a synthetic diagonal/calendar using a put ratio and call credit spread for tier 2 margin accounts/cash-secured positions. The breakevens are much wider than iron butterflies/butterflies as well; however, this is used to potentially acquire shares and the BPR is large in smaller accounts. Has anyone constructed something similar? The reason I wanted this is because if diagonals or calendars are used in a high IV market, imp vol could get crushed and butterflies aren't as wide of BEs.
Edit: In hindsight, the BPR is too significant for smaller accounts.

[KBBAKTHA]

I have just one word to describe this video. BRILLIANT. Thanks for sharing so much of in depth knowledge into options for income generation.

[srai]

is this strategy listed in your app ? I don't see them on the strategy option

[tylerwestra]

Okay so If I’m short a put I can just add in the put debit if I’m thinking there’s more downside to reduce risk on a stock I’m looking to own? And around expiration I can lock in the debit spread, short put either close (worthless) or if itm roll down a week or two as I’m looking to get the shares the cheapest?

[johnnymomascaro]

Thanks, Mike. James Cordier in his book co-authored with Michael Gross called "Selling Options" very much likes the Ratio Spreads. He, however, prefers to use a minimum 3:1 ratio and as high as 5:1 oir 6:1 as necessary. Your thoughts?

[grantgre]

So if you have two puts that you’re selling and one that you’re buying and then you might have to end up buying the stock and giving it to the buyer so you would have to have a cash secured for your broker. Otherwise that would be essentially having a naked put?

[andhrasabala]

How to calculate upper/lower breakeven for one OTM short put and 2 otm short call?
ex 80 1 put sell @3
120 2 call's sell @3

[scotturbanski]

Hi Mike I have a question. I deployed this strategy on EFA as a potential long stock entry. I got an 8 dollar credit but my broker made me put up 3200 in collateral for the naked short put. 8 dollar credit on 3200 is a pretty weak return should the spread expire worthless. What do you think I should do to improve the rate of return should it go up or sideways?

[justinledesma]

Does time decay still work the same as a credit spread?

[nicolasbriceno]

I’m confused selling in high IV. Correct me if I’m wrong, but since you are selling at high IV, the premium that you collect will be higher because the short OTM puts will have more extrinsic value than that of the long put that’s closer to ITM. You expect an IV contraction to benefit the short puts. Although the IV contraction is bad for the long position, the extrinsic value will play less of a roll in option contracts that are closer to ITM... I also have another question... if you sell 2 contracts vs 1, do you have higher Greeks, such as VEGA, delta, Gamma, and theta ?