A ratio backspread is an options strategy that can produce profits in uncertain markets. The goal is to benefit from an explosive move in one direction while limiting risk. A backspread can be created with either puts or calls. In either case, you short options while buying a larger number of options (in a ratio such as 1:2 or 2:3) with strikes that are further from the market’s current value.

If you enter the spread at a credit (which means the premium you receive from the short options is larger than the cost of the long options), you keep the premium if the underlying trades in a range. However, a backspread can earn much larger profits if the underlying moves substantially in the right direction, especially if you expect implied volatility to climb.