Ratio Call Write

Filed Under » , ,
Dictionary Says

Definition of 'Ratio Call Write'

An option strategy in which an investor owns shares in the underlying stock and writes more at-the-money call options than the amount of underlying shares owned. The goal of a ratio call write is to capture the premiums received by the option sale. The call writer hopes that there is little volatility in the underlying stock over the same period..
Investopedia Says

Investopedia explains 'Ratio Call Write'

In ratio call writing, the ratio represents the amount of options sold for every 100 shares owned in the underlying stock. For example, a 3:1 ratio call write implies writing three call option contracts (a total of 300 call options) and being long one hundred shares of the asset. The payoff from holding the asset and writing the calls resembles a reverse straddle.

The profit range for ratio call writes is often very narrow. A large drop in price may end up costing the trader a considerable sum of money. If the price of the underyling shares increases too much, the trader will lose. There is no limit to the potential downside with an increasing underlying price.
Search results for

'Ratio Call Write'

  • Ratio Writing: A High-Volatility Options Strategy

    http://www.investopedia.com/articles/optioninvestor/02/111202.asp
    ... best scenario. For a call ratio write, however, a moderately bullish move
    is generally going to give you the best profit. With the ...

  • Covered Call Strategies For A Falling Market

    http://www.investopedia.com/articles/08/covered-call-strategy.asp
    ... Using LEAPS In A Covered Call Write.) Conclusion Leveraged ... can implement a leveraged
    covered call strategy in a ... profits and a low leverage ratio is maintained ...

  • Options Greeks: Gamma Risk and Reward | Investopedia

    http://www.investopedia.com/university/option-greeks/greeks5.asp
    ... Call Ratio Spread, Negative. Put Ratio Spread, Negative. Put Back Spread, Positive.
    Call Back Spread, Positive. Calendar Spread, Positive. Covered Call Write, Positive ...

  • Options Greeks: Delta Risk and Reward | Investopedia

    http://www.investopedia.com/university/option-greeks/greeks2.asp
    ... Put Ratio Spread, Positive. Call Back Spread, Positive. Put Back Spread, Negative.
    Calendar Spread, (Near) Neutral. Covered Call Write, Negative. ...

  • What is the put-call ratio and why should I pay attention to it?

    http://www.investopedia.com/ask/answers/06/putcallratio.asp
    ... in the ratio or for when the ratio reaches levels ... more, see Forecasting Market Direction
    With Put/Call Ratios ... About Our Writers; Write For Us; Contact Us; Careers ...

  • Options Greeks: Vega Risk and Reward | Investopedia

    http://www.investopedia.com/university/option-greeks/greeks3.asp
    ... Call Debit Spread, Negative. Call Ratio Spread, Negative. Put Ratio Spread, Negative.
    Calendar Spread, Positive. Covered Call Write, Negative. Covered Put Write ...

  • Options Greeks: Theta Risk and Reward | Investopedia

    http://www.investopedia.com/university/option-greeks/greeks4.asp
    ... Call Ratio Spread, Positive. Put Ratio Spread, Positive. Put Back Spread, Negative.
    Call Back Spread, Negative. Calendar Spread, Positive. Covered Call Write, Positive ...

  • Gamma-Delta Neutral Option Spreads

    http://www.investopedia.com/articles/optioninvestor/07/gamm_delta_neutral.asp
    ... The Strategy For our purposes, we will be using a ratio write call strategy
    as our core position. In these examples, we will be ...

  • Using Options Instead Of Equity

    http://www.investopedia.com/articles/optioninvestor/07/options_instead_equity.asp
    ... when in many cases they can provide a superior risk/reward ratio over simply ... the
    strategy uses LEAPS in lieu of actual stock in a covered call write in order ...

  • Forecasting Market Direction With Put/Call Ratios

    http://www.investopedia.com/articles/optioninvestor/02/052102.asp
    ... In this article, I will explain the basic put/call ratio method and include
    new threshold values for the equity-only daily put/call ratio. ...

Related Articles

Partner Links