The Put Ratio Spread is a neutral strategy in options trading adopted by traders. The strategy involves buying a select number of put options of a particular stock and expiration date at a higher strike price and selling more options at a lower strike price. It is an unlimited risk options trading strategy which offers a limited profit and is generally opted for by options trader when they believe that the particular stock will not grow and the price will fall, but not more than the strike price in the near term. This options trading strategy is majorly used to reduce the upfront costs of premium and in some cases, upfront credit can also be received. The put ratio strategy permits you to buy a put that is at-the-money or slightly out-of-the-money without paying the complete price. The goal is to obtain the put with strike B for a credit or a very small debit by selling the two puts with strike A.
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