Put Ratio Back Spread – Volatility-Driven Bearish Play

A Put Ratio Back Spread is a strongly bearish strategy where one Put is sold and two lower strike Puts are bought. It benefits from sharp downside moves with limited risk if the market moves slightly upward. When to use: Use this strategy when you expect a sharp fall along with rising volatility, not a slow or sideways move. Historic Example: By end of February 2024,

was trading near ₹320, and was expected to fall below ₹300 for March 2024 expiry. • Sell 1 × 320 Put @ ₹9 • Buy 2 × 310 Put @ ₹4 each Net premium received = ₹1 Profit & Risk: Upper Breakeven ≈ ₹319 Lower Breakeven ≈ ₹299 Max Profit = Unlimited if price falls sharply Max Loss = Limited if price stays near sold strike Key takeaway: Put Ratio Back Spread works best in high-volatility bearish phases where sharp downside expansion is expected; range-bound markets make this strategy uncomfortable. 📌 Disclaimer: This content is for information only and not investment advice. Investments in securities market are subject to market risks. Read all the related documents carefully before investing. Please consult a SEBI-registered advisor before making any investment decisions.