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Short Calendar Ratio Spread


A calendar ratio spread which involves buying short-term at-the-money options of the same type (both calls or both puts) and selling a smaller amount of long-term out-of-the-money options of the same type, all on the same underlying. This strategy is mainly designed to profit when the underlying breaks out in either direction.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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