Question 1

What is a front-ratio spread?

Accepted Answer

You buy one option near the money and sell two or three further out of the money in the same expiration. The extra short premium usually pays for the long, so the trade opens for a credit or a small debit. It makes the most if the stock drifts toward the short strike by expiration, where the payoff peaks.

Question 2

What does the Chance of Profit column mean?

Accepted Answer

It is the share of the ticker's own historical moves, under the current regime, that would have left the position at or above breakeven at expiration. The tool replays each historical multi-day move, lands the stock at that price, and scores the ratio's payoff. Because it uses the real move distribution rather than a textbook bell curve, the odds can be lopsided.

Question 3

What is the Danger Level, and where is the risk?

Accepted Answer

Past the short strikes you are net short options, so a sharp move beyond them turns the position into an open-ended loss: above the strikes for a call ratio, below for a put ratio. The Danger Level is the breakeven price where profit flips to loss. Stay on the safe side of it and the trade is in the green at expiration.

Question 4

What is the difference between a 1x2 and a 1x3?

Accepted Answer

Every structure here is opened for a net credit. A 1x2 sells two shorts per long, leaving one extra short past the danger strike; a 1x3 sells three, which collects more credit but opens the loss faster once the stock runs past the strikes.

Question 5

How far out can I see expirations?

Accepted Answer

Up to 45 days. The expiration list comes from the actual options calendar, so holiday-shifted Thursdays (Good Friday, Christmas-on-Friday, etc.) snap to the correct date.

Short Ratio Spreads