Call Ratio Backspread

### What is a Call Ratio Backspread? I pull this one out ahead of events — earnings, a big policy announcement, results season — when I think there's a real shot at a sharp breakout, not just a slow grind. You sell one call closer to the money and buy two calls further out. If you can structure it for a net credit or close to zero cost, your downside risk shrinks to almost nothing. The catch: if the stock just sits still or drifts up slowly, this trade can actually lose money in that "dead zone" between your strikes — it wants either a big move or no move, not a boring one. ### Setup - **Sell 1 Call** at Strike $K_1$ - **Buy 2 Calls** at Strike $K_2$ (where $K_2 > K_1$)