Investopedia explains 'Put Ratio Backspread'
For example, a stock trading at $29.50 may have one-month puts trading as follows: $30 puts trading at $1.16 and $29 puts trading at 62 cents. A trader who is bearish on the underlying stock and wishes to structure a put ratio backspread that would profit from a decline in the stock, could buy two $29 put contracts for a total cost of $124 and sell short a $30 put contract to receive the $116 premium. (Remember that each option contract represents 100 shares). The net cost of this 2:1 put ratio backspread, without taking commissions into account, is therefore $8.
If the stock declines to $28 at expiration, the trade breaks even (leaving aside the marginal $8 cost of putting on the trade). If the stock falls to $27 at option expiry, the gross gain is $100; at $26, the gross gain is $200 and so on.
If, on the other hand, the stock appreciates to $30 by option expiry, the maximum loss is restricted to the cost of the trade or $8. The loss is restricted to $8 regardless of how high the stock trades by option expiry.
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