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Ratio spread
Ratio spreadConstructed with either puts or calls, the strategy consists of buying a certain amount of options and then selling a larger quantity of more out-of-the-money options. RELATED TERMS-------------------------------------- Strategy The general or specific approach to investing that an individual, institution, or fund manager employs. SIMILAR TERMS-------------------------------------- Ratings An evaluation of credit quality of a company's debt issue by Thomson Financial BankWatch, Moody's, S&P, and Fitch Investors Service. Investors and analysts use ratings to assess the riskness of an investment. Ratio The relation between two quantifies expressed as the number of times one is greater than the other. Ratio analysis A way of expressing relationships between a firm's accounting numbers and their trends over time that analysts use to establish values and evaluate risks. Ratio calendar combination A strategy consisting of a simultaneous position of a ratio calendar spread using "calls" and a similar position using puts, where the striking price of the "calls" is greater that the striking price of the "puts". Ratio calendar spread Selling more near-term options than longer-term ones purchased, all with the same strike; either puts or calls. Ratio strategy A strategy in which one has an unequal number of long securities and short securities. Normally, it implies a preponderance of short options over either long options or long stock. Ratio writer An option writer who does not own the number of shares required to cover the call options he or she writes. Rational expectations The belief that people's expectations compensate for, and render useless, interventionist government policy. Rationalization A reorganization of a company in order to increase its efficiency. Rationalize To eliminate unnecessary employees, equipment, processes, etc. from a company or factory to make it more efficient. PREVIOUS AND NEXT TERMS-------------------------------------- Ratings An evaluation of credit quality of a company's debt issue by Thomson Financial BankWatch, Moody's, S&P, and Fitch Investors Service. Investors and analysts use ratings to assess the riskness of an investment. Ratio The relation between two quantifies expressed as the number of times one is greater than the other. Ratio analysis A way of expressing relationships between a firm's accounting numbers and their trends over time that analysts use to establish values and evaluate risks. Ratio calendar combination A strategy consisting of a simultaneous position of a ratio calendar spread using "calls" and a similar position using puts, where the striking price of the "calls" is greater that the striking price of the "puts". Ratio calendar spread Selling more near-term options than longer-term ones purchased, all with the same strike; either puts or calls. Ratio spread Ratio strategy A strategy in which one has an unequal number of long securities and short securities. Normally, it implies a preponderance of short options over either long options or long stock. Ratio writer An option writer who does not own the number of shares required to cover the call options he or she writes. Rational expectations The belief that people's expectations compensate for, and render useless, interventionist government policy. Rationalization A reorganization of a company in order to increase its efficiency. Rationalize To eliminate unnecessary employees, equipment, processes, etc. from a company or factory to make it more efficient. We thank you for using the Financial Dictionary to search for Ratio spread. If you have a better definition for Ratio spread than the one presented here, please let us know by making use of the suggest a term option. This definition of Ratio spread may be disputed by other professionals. Our attempt is to provide easy definitions on Ratio spread and any other medical topic for the public at large.
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