> 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-put-spread.md).

# Ratio Put Spread

## Long Ratio Put Spread

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

![](/files/UzYizA3aoClTvAhBKY2V)

**Direction Assumption:** Neutral-Bearish\
Ideally you want the underlying to decline 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 Put strike price on expiration.

**Maximum Loss:** Unlimited

**Breakeven Price:** \
• If net credit received: Equal to the Short Put strike price minus maximum profit potential.\
\
• If net debit paid: \
1\) On the lower end, Equal to Long Put Strike Price minus net debit paid.\
2\) On the higher end, equal to the Short Put Strike Price minus 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 Puts in a bigger extent than the Long Put.

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

## Short Ratio Put Spread