Put Ratio Backspread Calculator

A put ratio backspread sells one put and buys two puts at a lower strike on the same expiry, for a small credit or close to zero cost. It is the bearish mirror of the call version: a sharp fall below the long strike pays increasingly, a rise returns the credit, and the worst case is the stock settling at the long strike at expiry.

When it is used

It suits a view that a stock could fall hard, with a catalyst or a fragile chart, while keeping the cost near zero if the fall never comes. Since puts gain implied volatility in a sell-off, the two long puts benefit twice, from price and from volatility, which is why the structure is popular as crash protection that pays for itself.

How it makes and loses money

A fast decline is the profit engine, and the gain keeps growing toward a stock price of zero. The loss sits in the zone around the long strike at expiry, where the short put is losing and the long puts are worthless. Time decay hurts in that zone and matters little far from it.

What to check in the grid

The expiry column has a valley at the long strike; the early columns show it as much shallower. A move into the valley weeks before expiry is still roughly flat, which is the time to decide whether to hold for the move or take the position off.