Ratio spread
Buy one option, sell two further out. Often a net credit, with a drift target and a naked tail you must respect.
BIASSlow drift
VOL VIEWSkew rich
RISKUndefined
STRUCTURE1:2
RATOPAYOFF AT EXPIRY
LEGSLIVE CHAIN—
| ACTION | QTY | TYPE | STRIKE | LAST |
|---|
Profits if the index drifts slowly toward the short strike, where the long leg's gain is largest and the shorts expire worthless. Beyond the shorts one option is naked, so risk grows without limit -- position size accordingly.