RATIO CALL SPREAD	RISK REVERSAL
About Strategy	Ratio Call Spread Option Strategy  As the name suggests, a ratio of 2:1 is followed i.e. buy 1 ITM Call and simultaneously sell OTM Calls double the number of ITM Calls (In this case 2). This strategy is used by trader who is neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited since he is Read more..	Risk Reversal Option Strategy This strategy protects an investor from unfavourable price movements in the position but limits the profits can be made on that position. A risk reversal is a hedging strategy that protects a long or short position by using put and call options. In this one option is buying and other is written. In this strategy the trader has to pay a premium, while the written option prod .. Read more..

RATIO CALL SPREAD Vs RISK REVERSAL - Details

	RATIO CALL SPREAD	RISK REVERSAL
Market View	Neutral	Bullish
Type (CE/PE)	CE (Call Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	3	2
Strategy Level	Beginners	Advance
Reward Profile	Limited	Unlimited
Risk Profile	Unlimited	Unlimited
Breakeven Point	Upper Breakeven Point = Strike Price of Short Calls + (Points of Maximum Profit / Number of Uncovered Calls), Lower Breakeven Point = Strike Price of Long Call +/- Net Premium Paid or Received	Premium received - Put Strike Price

RATIO CALL SPREAD Vs RISK REVERSAL - When & How to use ?

	RATIO CALL SPREAD	RISK REVERSAL
Market View	Neutral	Bullish
When to use?	This strategy is used by trader who is neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited since he is selling two calls.	This strategy can be used for hedging. When an investor want to protect long or short position by using a call and put option.
Action	Buy 1 ITM Call, Sell 2 OTM Calls	This strategy work when an investor want to hedge their position by buying a put option and selling a call option.
Breakeven Point	Upper Breakeven Point = Strike Price of Short Calls + (Points of Maximum Profit / Number of Uncovered Calls), Lower Breakeven Point = Strike Price of Long Call +/- Net Premium Paid or Received	Premium received - Put Strike Price

RATIO CALL SPREAD Vs RISK REVERSAL - Risk & Reward

	RATIO CALL SPREAD	RISK REVERSAL
Maximum Profit Scenario	Strike Price of Short Call - Strike Price of Long Call + Net Premium Received - Commissions Paid	You have unlimited profit potential to the upside.
Maximum Loss Scenario	Price of Underlying - Strike Price of Short Calls - Max Profit + Commissions Paid	You have nearly unlimited downside risk as well because you are short the put
Risk	Unlimited	Unlimited
Reward	Limited	Unlimited

RATIO CALL SPREAD Vs RISK REVERSAL - Strategy Pros & Cons

	RATIO CALL SPREAD	RISK REVERSAL
Similar Strategies	Variable Ratio Write	-
Disadvantage	• Unlimited potential loss. • Complex strategy with limited profit.	Unlimited Risk.
Advantages	• Downside risk is almost zero. • Investors can book profit from share prices moving within given limits. • Trader can maximise profit when the share closes at the upper breakeven point.	Unlimited profit.