Call Ratio Backspread
Explosive upside, capped mid-range risk
Sell one ATM call, buy two further OTM calls. Small defined risk in the middle, substantial profit if spot runs hard, without a straddle's full cost.
Payoff at expiry
Illustrative · NIFTY @ 25000Max Profit
Unlimited
Max Loss
₹9,256
Breakeven
25223
How it's built
Sell one ATM call and buy two calls two strikes higher, same expiry. That leaves you net long two calls against one short, usually for a small net credit or close to zero cost depending on the smile.
When to deploy it
You want convex, open-ended upside exposure like a long call, but you're willing to accept a defined loss zone in the middle of the range, where the short call's cost outpaces the two long calls, in exchange for cutting the net premium outlay versus buying two naked calls.
Worked example
Say NIFTY is trading around 25,000 with a few sessions left before expiry. You sell the 25000 call for ₹109, and you buy the 2x 25100 call for ₹66 — a net debit of ₹1,756 for one lot of 75.
At expiry, the position is worth the most once NIFTY is on the right side of 25223 — up to an amount that keeps growing the further it runs, with no cap. Move against that line instead and the worst case is capped at ₹9,256 per lot, not open-ended.
Mistakes that break this strategy
- Ignoring the "dead zone" between the short strike and the long strikes, where the position can lose more than either a single long call or doing nothing at all.
- Sizing the short leg 1:1 without checking whether the resulting position is a net credit or a net debit. That changes the whole risk picture.
- Deploying this as a default bullish trade rather than reserving it for real conviction that a move, if it comes, comes hard and fast.
More bullish strategies
See it read live, not just diagrammed
DeltaK reads Aegis/Zenith wall migration and RRG rotation live across NIFTY, BANKNIFTY, FINNIFTY and MIDCPNIFTY. Sign in and watch it work in Paper mode.