> For the complete documentation index, see [llms.txt](https://guide.laevitas.ch/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://guide.laevitas.ch/option-strategies/ratio-call-spread.md).

# Ratio Call Spread

## Long Ratio Call Spread

{% hint style="info" %}
A Long Ratio Call Spread is a combination of purchasing a lower strike Call and sale of two higher strike Calls, with the same expiration. This can be done with any ratio of long vs short Calls.
{% endhint %}

**Payoff Diagram:**

![](/files/24vSacDbQHwyskzv2uvC)

**Direction Assumption:** Neutral-Bullish\
Ideally you want the underlying to rise all the way to the short strike price, but not go past the short strike.

**Maximum Profit:** Limited to the net credit received. \
Maximum profit is realized when the underlying moves to Short Call strike price on expiration.

**Maximum Loss:** Unlimited

**Breakeven Price:** \
• If net credit received: Equal to the Short Call strike price + maximum profit potential.\
\
• If net debit paid: \
1\) On the lower end, Equal to Long Call Strike Price + net debit paid.\
2\) On the higher end, equal to the Short Call Strike Price + maximum profit potential.

**Theta:** Passage of Time -> Positive Effect\
The net effect of time decay is positive. It will erode the value of the two Short Calls in a bigger extent than the Long Call.

**Volatility:** \
If Volatility increases -> Negative Effect. \
If Volatility decreases -> Positive Effect.

## Short Ratio Call Spread