The Ratio Call Spread (AKA Call Front – Ratio spread) in an unlimited risk strategy profits when the underlying Stock, Future, or ETF’s market direction is slightly Bullish to market neutral. While the nature of this strategy is an unlimited risk, the added short call (this short call makes this strategy unlimited risk) eliminates all downside risk. If a trader believes that a stock (or ETF), in their portfolio, is going to trade sideways to higher from its current location but wants to be able to hedge some of the risks in the event that stock (or ETF) sells off, it may be a great time to implement a Ratio Call Spread (attaching this strategy to a stock in a portfolio eliminates the “unlimited risk” associated to the Ratio Call Spread but the stock in one’s portfolio could be called away).

Join Eric “The Wolfman” Wilkinson, former Chicago Board of Trade floor trader and 25-year professional trader, as he explains how traders can profit from multiple movements in an underlying and how they can take advantage of High Implied Volatility. He will show when it is appropriate and how to correctly implement a Ratio Call Spread with any stock or ETF