A ONE-STOP PORTAL OF INFORMATION FOR FUTURES AND COMMODITIES TRADERS
A ratio write is a position that includes selling
multiple options for each futures
position.
Profits are limited to the total
premium received plus some appreciation in the futures
position. Risk is unlimited on the upside and on the
downside. This position is engaged in a high-volatility
environment with the expectation that volatility will
decline over time.
This trade is appropriate for
declining volatility and a stagnant market.
Position
Premium
Dollar Premium
Delta
Buy one $20 crude oil futures
00
00
+1.00
Sell two $22 calls
$0.50 per call
$500
-.58
- Net Credit
$1.00
$1,000
00
- Net delta
00
00
+.42
00
00
00
00
Maximum risk
unlimited on the upside and theoretically on the downside
00
00
Maximum profit
$3,000
00
00
Break-even futures price
$19.00 and $25.00
00
00
Position
Premium
Dollar Premium
Delta
Buy one $260 gold futures
00
00
+1.00
Sell two $280 calls
$1.10 per call
$110
-.30
- Net Credit
$2.20
$220
00
- Net delta
00
00
+.70
00
00
00
00
Maximum risk
Unlimited on the upside and theoretically on the downside
