Put Ratio Spread strategies are limited profit and unlimited risk because they are net Short (i.e. more Options sold than bought). Put ratio Spreads are considered less risky than naked Short puts and Short straddles because the Long option helps to reduce losses.
Put Ratio Spread strategies are Bullish because the sold puts become cheaper to buy back as the price rises, however, they are less directional than selling naked puts. If the price moves higher, the upper side is protected. Put Ratio Spreads have similar characteristics to Broken Wing Butterfly Options strategies, except they are risk undefined (and able to achieve higher profits as a result).
As with many Short Options strategies, they are Volatility Bearish and are more likely to profit if Volatility contracts after the position is opened.
Long Put Ratio Spreads (sometimes called back Spreads) are the inverse of Short Ratio Put Spreads and use ratios where there are more Long Options purchased than there are Short ones sold.
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The Ultimate Guide to Put Ratio Spreads
Video to accompany the article of the same name by Gavin McMaster. This is a useful explanation of put ratios that includes some tips on when and how to use them to best effect.
External LinksThe Ultimate Guide to Put Ratio Spreads
A detailed explanation of how to use put ratio spread strategies by Gavin McMaster. There are some useful tips on deploying put ratios shortly after sharp declines in an underlying stock (e.g. poor earnings) due to the increased implied volatilityShort Ratio Put Spread
OIC article describing Short Put Ratio Spreads.Ratio & Back Spreads
ThinkOrSwim guide to ratio spreads and back spreads.Put Ratio Spread
OptionsGuide.com article about Put Ratio Spreads.How to Construct a Put Option Ratio Spread
Trader Kingdom article about planning and implementing short put ratio spreads.