Put Ratio Spread Calculator
A put ratio spread buys one put and sells two or more lower puts. It peaks at the short strike and then turns down — below the lower breakeven the uncovered short put loses like being long stock, all the way to zero.
The arithmetic
The default buys one $100 put at $3.50 and sells two $90 puts at $1.10 — a net debit of $1.30, or $130.
- Peak profit = at $90: (10 − 1.30) × 100 = $870.
- Upper breakeven = $98.70.
- Lower breakeven = $81.30 — below this the position loses.
- Max loss = $8,130 if the underlying goes to zero. Not literally unlimited, because price stops at zero — but large enough that the distinction is academic.
- Upside = the $130 debit, if the stock finishes at or above $100.
A bearish position that punishes a crash
The mirror of the call ratio spread, and it fails the same way: right about direction, too right about magnitude. The position pays best at exactly $90 and gives it all back on the way to $81.30. In a genuine market break — the environment a bearish trade is supposed to be designed for — this structure is the wrong one to be holding.
Worse, the failure correlates with everything else. A 20% index decline is precisely when the uncovered short put is being assigned and the rest of a portfolio is already down.
The credit illusion
Put ratio spreads can often be opened for a net credit, because downside skew makes the lower puts you sell relatively expensive. A credit position that "cannot lose if the stock goes up" reads as free money. It is not: you have been paid a small amount to take on a large, correlated downside obligation. The credit is the fee for the tail, and the tail is priced that way because the market has seen it happen.
The legitimate use
A defined downside target with support beneath it — a retest of a known level, a fade back to a prior base — where the peak sits on the target and the lower breakeven sits well below any price you consider plausible. Combined with a hard rule to close before the short strike is breached, it is a real structure. Held blind through a decline, it is the position that ends the year.
Where the 100x multiplier comes from
Product specification, not convention: OCC defines a standard equity option as covering 100 shares, premium quoted in points where one point is $100[1] — so a $1.85 premium costs $185, and every payoff here applies that multiplier to the leg structure.
One exception is worth knowing about: adjusted contracts, covered on the options profit calculator.
Calculating it is the easy half
The credit is one number; the obligation underneath it is the thing worth timestamping. The payoff is arithmetic — anyone can run it. What it cannot show is whether you believed the trade when you put it on, or are describing a winner picked out of a month of noise.
That is the gap kappi closes: the position committed before the fact, sealed and timestamped on a log nobody can edit afterwards. A screenshot of this chart proves you can use a calculator; a sealed commit proves you took the trade. $15/month, no free tier.
Sources
Frequently asked questions
What is the maximum loss on a put ratio spread?
Reached if the underlying goes to zero: roughly the uncovered short put's strike times 100, less the credit or plus the debit. In the default, $8,130.
What is the lower breakeven on a 1x2 put ratio spread?
Short strike − (strike width − net debit) for a 1x2. In the default, $90 − (10 − 1.30) = $81.30.
Why do put ratio spreads often open for a credit?
Volatility skew makes lower-strike puts relatively expensive, so selling two of them can bring in more than the single higher put costs. That credit is compensation for the uncovered downside.
Is it safe because the stock can't go below zero?
The loss is technically bounded rather than unlimited, but the bound is very large and arrives in exactly the market conditions that hurt the rest of a portfolio.