Put Ratio Spread 1x2
Also known as: Front Ratio Put Spread
Slightly bullish or neutral to moderately bearish down to strike B — want to enter for zero cost while having maximum profit when the stock hits strike B at expiration
Risk Profile at a Glance
How to Construct the Put Ratio Spread 1x2
- 1.Buy 1 put at strike A (higher)
- 2.Sell 2 puts at strike B (B < A)
- 3.Net credit or near-zero cost
- 4.Same expiration
Understanding the Put Ratio Spread 1x2
The put ratio spread 1x2 is the put-side mirror of the call ratio spread. You buy one put and sell two puts at a lower strike, aiming for zero or near-zero net cost. Maximum profit occurs when the stock is exactly at the lower (short) put strike at expiration. Below strike B, the two short puts begin to create losses, and the position has substantial (theoretically near-unlimited) downside risk as the stock approaches zero.
This strategy is for traders who are neutral to slightly bullish but want a free or cheap bet on the stock staying above a key support level. If the stock holds above the short strikes, all puts expire worthless and you keep any credit received. The two short puts finance the long put. Like all ratio spreads, the real risk is the two uncovered short puts below the lower strike — always have a clear exit plan if the stock breaks support.
Active management required..
When to Use It — EdgeOS Signal Integration
- ✓Ideal when SCTR > 9 and EdgeOS bull count = 1 (fresh ignition trigger)
- ✓Extension score below 0.8 (Tight or Mod) — stock has room to run
- ✓Confirmed or fluid bullish trend — EMA alignment supports the direction
Compare with Similar Strategies
Other Ratio Spreads Strategies
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Frequently Asked Questions
What is the Put Ratio Spread 1x2 options strategy?
The put ratio spread 1x2 is the put-side mirror of the call ratio spread. You buy one put and sell two puts at a lower strike, aiming for zero or near-zero net cost.
When should I use the Put Ratio Spread 1x2?
Slightly bullish or neutral to moderately bearish down to strike B — want to enter for zero cost while having maximum profit when the stock hits strike B at expiration
What is the maximum loss on the Put Ratio Spread 1x2?
The maximum loss on the Put Ratio Spread 1x2 is theoretically unlimited — the position has an uncovered short leg that can lose without bound if the stock moves against you. Always use strict stop-loss rules.
How does the Put Ratio Spread 1x2 compare to similar strategies?
The Put Ratio Spread 1x2 is a bullish complex strategy. Compared to the Call Ratio Spread 1x2 (bearish, complex), the Put Ratio Spread 1x2 has unlimited max risk and limited max reward. Your choice depends on your directional bias, IV environment, and risk tolerance. The TraderValue strategy comparison tool lets you see the exact payoff differences side by side.