Traders use a ratio strategy when they believe the price of the underlying asset won't move much, although depending on the type of ratio spread trade used the trader may be slightly bullish or bearish. If the trader is slightly bearish they will use a put ratio spread.

When should I use spread strategy?

Spread strategy such as the 'Bull Call Spread' is best implemented when your outlook on the stock/index is 'moderate' and not really 'aggressive'. For example the outlook on a particular stock could be 'moderately bullish' or 'moderately bearish'.

What is ratio put spread?

Description. The short ratio put spread involves buying one put (generally at-the-money) and selling two puts of the same expiration but with a lower strike. This strategy is the combination of a bear put spread and a naked put, where the strike of the naked put is equal to the lower strike of the bear put spread.