Ratio Call Spread

This strategy consists of a short position in NS close to ATM call options with a strike price K1, and a long position in NL ITM call options with a strike price K2, where NL < NS. Typically, NL = 1 and NS = 2, or NL = 2 and NS = 3. This is an income strategy if it is structured as a net credit trade. The trader’s outlook is neutral to bearish.