What is 'Backspread'

A backspread is s a type of option trading plan in which a trader buys more call or put options than they sell. The backspread trading plan can focus on either call options or put options on a specific underlying investment. A backspread is a complex trading strategy with high risks that is typically only used by advanced traders.

BREAKING DOWN 'Backspread'

A backspread will generally be constructed as either a call backspread or a put backspread. A backspread can also be considered a type of ratio strategy since it will make unequal investments in two types of options. A backspread is the opposite of a frontspread in which a trader sells more options than they buy.

Ratio Spread

The term ratio spread helps a trader to illustrate and understand the ratio of a two-legged trading plan. A standard spread strategy occurs when an investor makes equal investment in both legs of the trading plan with a theoretical ratio of 1:1. Any spread strategy that does not invest equally in two legs of a trading plan is considered a ratio strategy with the ratio calculated based on the weightings of the investments.

Call Backspread

A call backspread or call ratio backspread is constructed by selling (writing) fewer call options on an underlying security than are bought. A trader will typically sell call options and use the proceeds to buy call options on the same security. A call backspread is a bullish trading plan that seeks to gain from a rising underlying security value.

For one example a call backspread could consist of one written call with a low strike price and two bought call options of a higher strike price. In a call backspread all of the options will have the same expiration. (See also: The Basics of the Long Ratio Backspread)

Put Backspread

A put backspread or put ratio backspread is constructed by selling (writing) fewer put options on an underlaying security than are bought. A trader will typically sell put options and use the proceeds to buy put options on the same security. A put backspread is a bearish trading plan that seeks to gain from a falling underlying security value.

For one example, a put backspread could consist of one written put with a high strike price and two bought put options with a lower strike price. Backspreads will use option contracts that have the same expiration. Typically, they are constructed on a 2:1, 3:2 or 3:1 ratio.


A frontspread will deploy a trading plan in which a trader sells more contracts than they buy. Frontspreads are also constructed as either a call frontspread or a put frontspread.

  1. Short Leg

    Any contract in an option spread in which an individual holds ...
  2. Call Ratio Backspread

    Call ratio backspread strateg refers to the buying and selling ...
  3. Long Leg

    The part of an option spread strategy that involves buying an ...
  4. Frontspread

    A type of options spread in which a trader holds more short positions ...
  5. Listed Option

    A listed option is a derivative security traded on a registered ...
  6. Bull Spread

    A bull spread is a bullish options strategy using either two ...
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