Vertical & Ratio Spreads¶

Vertical spreads combine buying and selling options of the same type (both calls or both puts) with different strikes but the same expiration. Ratio spreads extend this concept with unequal quantities on each leg.

Long Call Spread (Bull Call Spread)¶

Description¶

A bullish strategy that buys a lower strike call and sells a higher strike call, reducing cost but capping upside.

Composition: - Long 1 call at lower strike X - Short 1 call at higher strike Y

Example¶

import optopsy as op
results = op.long_call_spread(data, max_entry_dte=45, exit_dte=21)

Short Call Spread (Bear Call Spread)¶

Description¶

A bearish credit strategy profiting when the underlying stays below the short strike.

Composition: - Short 1 call at lower strike X - Long 1 call at higher strike Y (protection)

Example¶

results = op.short_call_spread(data, max_entry_dte=45, exit_dte=21)

Long Put Spread (Bear Put Spread)¶

Description¶

A bearish strategy profiting from downward moves with defined risk.

Composition: - Short 1 put at lower strike X - Long 1 put at higher strike Y

Example¶

results = op.long_put_spread(data, max_entry_dte=45, exit_dte=21)

Short Put Spread (Bull Put Spread)¶

Description¶

A bullish credit strategy profiting when the underlying stays above the short strike.

Composition: - Long 1 put at lower strike X (protection) - Short 1 put at higher strike Y

Example¶

results = op.short_put_spread(data, max_entry_dte=45, exit_dte=21)

Call Back Spread (Call Ratio Backspread)¶

Description¶

A bullish ratio strategy that profits from large upward moves. The 2:1 long-to-short ratio provides unlimited upside potential.

Composition: - Short 1 call at lower strike (ITM) - Long 2 calls at higher strike (OTM)

Example¶

results = op.call_back_spread(data, max_entry_dte=45, exit_dte=21)

Put Back Spread (Put Ratio Backspread)¶

Description¶

A bearish ratio strategy that profits from large downward moves. The 2:1 long-to-short ratio provides large downside profit potential.

Composition: - Short 1 put at higher strike (ITM) - Long 2 puts at lower strike (OTM)

Example¶

results = op.put_back_spread(data, max_entry_dte=45, exit_dte=21)

Call Front Spread (Call Ratio Spread)¶

Description¶

A neutral-to-slightly-bullish strategy that profits from time decay when the underlying stays near the short strike.

Composition: - Long 1 call at lower strike (ITM) - Short 2 calls at higher strike (OTM)

Example¶

results = op.call_front_spread(data, max_entry_dte=45, exit_dte=21)

Put Front Spread (Put Ratio Spread)¶

Description¶

A neutral-to-slightly-bearish strategy that profits from time decay when the underlying stays near the short strike.

Composition: - Long 1 put at higher strike (ITM) - Short 2 puts at lower strike (OTM)

Example¶

results = op.put_front_spread(data, max_entry_dte=45, exit_dte=21)

Comparison Table¶

Vertical Spreads¶

Spread	Direction	Type	Max Profit	Max Loss
Long Call	Bullish	Debit	Width - debit	Debit paid
Short Call	Bearish	Credit	Credit	Width - credit
Long Put	Bearish	Debit	Width - debit	Debit paid
Short Put	Bullish	Credit	Credit	Width - credit

Ratio Spreads¶

Spread	Direction	Ratio	Max Profit	Max Loss
Call Back	Very bullish	1:2	Unlimited	Limited
Put Back	Very bearish	1:2	Large	Limited
Call Front	Neutral	1:2	Net credit	Unlimited above strike
Put Front	Neutral	1:2	Net credit	Unlimited below strike