A ratio put spread is used when you expect the underlier to fall, but not beyond a certain point. A ratio put spread consists of a single long position in a put and a number of short positions in puts of lower strikes, the latter are used in order to finance or reduce the cost of the long put.
Want to learn more? Download now an interactive reference application for iPhone.
The screenshot shows the following portfolio:
European put struck at 11.000 with expiry in 30 days
European put struck at 9.000 with expiry in 30 days
This is an excerpt from iOptioneer option trading reference application. In order to build the real-time dynamic strategy graph and run simulations you will need to download the application from App Store.