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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 0000 +1.00
Sell two $22 calls $0.50 per call$500 -.58
- Net Credit $1.00 $1,000 00
- Net delta 0000 +.42
00 0000 00
Maximum risk unlimited on the upside and theoretically on the downside00 00
Maximum profit $3,00000 00
Break-even futures price $19.00 and $25.00 00 00

Position
Premium
Dollar Premium
Delta
Buy one $260 gold futures 0000 +1.00
Sell two $280 calls $1.10 per call$110 -.30
- Net Credit $2.20 $220 00
- Net delta 0000 +.70
00 0000 00
Maximum risk Unlimited on the upside and theoretically on the downside 00 00
Maximum profit $2,44000 00
Break-even futures price $255.60 and $304.40 00 00

  

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