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Reverse Call Spreads

Reverse Calendar Call Spread:

  • Sell long term call, buy a shorter term call at same strike
  • Makes profit if either stock price moves significantly or
  • Makes profit if IV shrinks

Reverse Ratio Call Spread (Backspread):

  • Sell a call at a strike, buy more calls at a higher strike
  • Credit spread
  • If the stock rises, profit is from the calls bought
  • If the stock drops, all calls expire worthless. Initial credit is the profit.