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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Ratio spread definition

A ratio spread is a strategy used in options* trading, in which a trader will hold an unequal number of buy and sell options positions on a single underlying asset at once.

The ratio spread strategy is a variation of the option spreads strategy. The difference between the two is in the ratio of buy to sell positions: in a ratio spread the ratio is always unequal, in an option spread they are equal.

In most ratio spreads, the trader will sell two options for every option purchased (though different ratios can be used). Ratio spreads can be used with either call or put options.

Ratio spreads are most likely to return a profit in the following situations:

  • When the options being used are falling in implied volatility
  • When the underlying asset’s price moves steadily in the trader’s favour

We offer a wide range of options which can be used for a ratio spread. 

Visit our options trading section

Find out more in our options trading section.

*Options are only available via spread betting accounts and professional CFD accounts.

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