Option Strategies such as ratio spread and the back spread can be effectively used in a less volatile environment. The article looks into both these strategies in a greater detail.

A striking feature of the stock market is the number of risk lovers who are ready to take a risk to make a profit. Similar to stock trading strategies, various derivatives trading strategy are also in existence. Among the various option trading strategies available to the risk-lovers, one of the most popular is theRatio Spread and its opposite spread, the Back Spread.

While they give a reasonable amount of profits if the stocks are less volatile, they could entail unlimited losses if there is a sharp rise or fall in the stock prices. The ratio spread and the back spread are possible with both call (option to buy) and put (option to sell) and can be done with any number of options unlike the other popular strategies used by traders. It is suitable to brokers and traders who are in touch with the markets through trading terminals, as they can keep track of any movements in the prices of the stock and can take remedial steps before incurring a loss. Nevertheless, both these strategies are risky and calls for proper understanding before adopting them.

Portfolio Organizer Magazine, Indian Stock Markets, Stock Trading Strategies, National Stock Exchange, NSE, Bombay Stock Exchange, BSE, Foreign Institutional Investors, FIIs, Indian Markets, Securities and Exchange Board of India, SEBI, Option Strategies.