Ratios & backspreads
Mildly bearish, not a crash
Debit or credit
Risk: Large below
Put ratio spread
Also called: 1x2 put spread
Buy one put and sell two lower-strike puts: little or no cost, a profit peak at the short strike, and large risk in a crash.
Payoff sketch (per unit, index points)
At expiry
Today (7 days left)
Net premium
Credit 9 pts
Max profit
+209 pts (₹13,566 per lot)
Max loss
Large as the price falls
Breakeven
24,591
How it works
A bear put spread with an extra short put. Because index puts carry a skew premium, the two sold puts often pay for the bought one.
The extra put is naked below the lower breakeven, exactly where volatility and margins tend to jump.
When traders use it
- A view of a modest decline to a target, with no expectation of a crash.
Greeks
| Delta | Small at entry, negative or positive depending on how far out the sold puts are; increasingly positive below the short strike. |
| Gamma | Negative near and below the short strike. |
| Theta | Positive near the short strike. |
| Vega | Negative. |
Profit, loss and margin
| Max profit | (Strike gap + net credit, or − net debit) × quantity, at the short strike. |
| Max loss | Large below the lower breakeven. |
| Breakeven | Lower: short strike − strike gap − net credit (or + net debit). Upper, only if entered for a debit: long strike − debit. |
| Margin | Margin for one naked short put. |
In India
- Short options are margined like futures: NSE Clearing's SPAN risk margin plus an exposure margin (2% of notional for index contracts, 3.5% for stocks in Arthfy's model). An at-the-money short option on NIFTY typically blocks well over a lakh of rupees per lot.
- STT is charged on the premium when an option is sold (0.15% of premium from 1 April 2026 in Arthfy's cost model). A short option left to expire, in or out of the money, is not charged STT again at settlement.
- Stock options and stock futures are physically settled: an in-the-money stock option held through expiry becomes a delivery of shares (taxed and margined like a delivery trade, on the full value), so brokers often square such positions off in expiry week or raise margins. Index options are cash-settled.
Arthfy numbers
Arthfy's history does not cover ratio spreads yet.
Try it in the F&O hub
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