Understand ratio spreads — Hinglish notes

5.4.11 · Stock-Market › Options Strategies

YEH strategy exist kyun karti hai?

WHAT aap sochte hain: stock thodi si upar jaaye, short strike ke paas aake ruke, aur aage na jaaye.
WHY yeh smart lagta hai: aapko ek narrow zone mein bullish rehne ke paise milte hain.
HOW aap iske liye pay karte hain: strong direction mein galat hone ke risk se.

Pehle principles se build karna

Chaliye canonical 1×2 call ratio spread ka payoff derive karte hain strikes $K_{1} < K_{2}$ ke saath.

Ingredients (sab per share, expiry $T$ ):

Long 1 call $K_{1}$ par, premium $c_{1}$ diya.
Short 2 calls $K_{2}$ par, premium $c_{2}$ each mila.

Net premium (positive = credit mila): $P = 2 c_{2} - c_{1}$

Yeh step kyun? Har option ki cost abhi ek cash flow hai; hum unhe net karte hain. Do bechne se $2 c_{2}$ milta hai, ek khareedne mein $c_{1}$ lagta hai.

Expiry par ek call ka payoff underlying $S$ ke liye: $long call (K) = max (S - K, 0), short call (K) = - max (S - K, 0)$

Combine karo — expiry par total value: $V (S) = long max (S - K_{1}, 0) - 2 two shorts max (S - K_{2}, 0)$

Total profit = expiry par value + net premium: $Π (S) = max (S - K_{1}, 0) - 2 max (S - K_{2}, 0) + P$

$P$ kyun add karte hain? $P$ woh cash hai jo aapne pehle se bank kar liya (ya diya). Profit = expiry par position ki value PLUS jo aapne setup karte waqt pocket kiya.

Teen zones mein profit padhna

Yeh pieces kyun? Har $max$ apni strike par "switch on" hoti hai. $K_{1}$ ke neeche kuch bhi intrinsic nahi → bas $P$ rakho. Strikes ke beech sirf long in-the-money hai → 1-for-1 badhta hai. $K_{2}$ ke upar do shorts kick in karte hain, toh slope $1 - 2 = - 1$ ho jaata hai → jaise $S$ badhta hai aap paise kho dete hain.

Key points (derive karo, memorize mat karo):

Max profit exactly $S = K_{2}$ par hoti hai (tent ki peak): $Π_{m a x} = (K_{2} - K_{1}) + P$ Kyun? Long call poori tarah in-the-money, shorts abhi bhi worthless.
Upper breakeven — $S > K_{2}$ wale piece ko 0 set karo: $- S + (2 K_{2} - K_{1}) + P = 0 \Rightarrow S_{B E}^{u p} = 2 K_{2} - K_{1} + P$ Kyun? Yahan ke upar naked short profit ko overwhelm kar deta hai.
Lower behavior: agar $P > 0$ (credit) hai, toh stock girne par bhi aap $P$ rakhte hain — koi downside loss nahi. Agar $P < 0$ (debit) hai, toh $K_{1}$ ke neeche loss sirf $∣ P ∣$ hai.
Uncapped loss jab $S \to \infty$ : slope $- 1$ hai, toh $Π \to - \infty$ . Yahi naked-short ka danger hai.

Worked examples

Common mistakes

Active recall

Recall Khud test karo (answers chupaao)

Do kyun becho aur ek kyun kharido? → long ko finance karne ke liye aur sasta/credit exposure lene ke liye.
Max profit kahan hai? → short strike $K_{2}$ par.
Yeh dangerous kyun hai? → extra naked short → upper breakeven ke baad unlimited loss.
Credit vs debit: downside par kya badalta hai? → credit, $K_{1}$ ke neeche $P$ rakhta hai; debit $∣ P ∣$ khota hai.

Ratio spread ko kya define karta hai?

Same-type, same-expiry options jisme longs aur shorts ki sankhya alag-alag strikes par unequal ho (jaise buy 1, sell 2).

1×2 call ratio spread mein net premium formula kya hai?

P = 2 c_{2} - c_{1}

(do shorts se mila minus ek long ko diya).

Call ratio spread maximum profit kahan achieve karta hai?

Exactly short strike

K_{2}

par;

Π_{m a x} = (K_{2} - K_{1}) + P

1×2 call ratio spread ka upper breakeven kya hai?

S_{B E}^{u p} = 2 K_{2} - K_{1} + P

Upper breakeven ke upar ratio spread risky kyun hai?

Ek short call naked hai, isliye payoff slope

- 1

ho jaata hai aur

S \to \infty

par loss unlimited hai.

Agar call ratio spread credit (

P > 0

) mein set up ho, toh stock hard girne par kya hoga?

Aap credit

P

rakhte hain; koi downside loss nahi.

Ratio spread vs backspread — key difference?

Ratio spread net short options hai (unlimited risk); backspread net long options hai (limited risk, unlimited reward).

Call ratio spread ke liye suitable market view kya hai?

Mildly bullish, expect karo ki stock

K_{2}

ki taraf badhegi lekin zyada aage nahi (short strike pin karo).

Recall Feynman: ek 12-saal ke bacche ko samjhao

Socho aapne 1 lottery ticket kharidi jo pay karti hai agar price thodi si badhey. Iske liye pay karne ke liye, aap apne dost ko 2 promises bechte hain jo use bhi pay karte hain agar price bahut, bahut zyada badhey. Do bechna aapki ticket cover kar leta hai — kabhi kabhi pocket money bhi milta hai. Agar price aapke "sweet spot" mein land kare, toh aap accha jeette hain. Lekin agar price rocket ki tarah moon tak jaaye, toh aap dost ko zyada se zyada dete rehte hain bina kisi limit ke. Toh yeh "thodi upar jaaye, bahut zyada nahi" waali bet hai.