Spreads3 legscreditbullish to neutral

Buy one put and sell two lower ones. An unbalanced structure that pays in a range and leaves a naked short beneath it — advanced, and the most easily misjudged position in this chapter.

The Strategy Builder does not construct this one — the reference shelf is broader than the picker. You can still build it by hand: add the legs below in the builder's leg table.

Buy one option and sell more than one further out. The extra short leg funds the long one, often producing a net credit, and leaves part of the position unhedged.

On the example the long $50 put is fully covered by one of the two short $45 puts. The second short put has nothing behind it — that is the naked component.

Ratio structures exist to be paid while holding a directional view. The payment comes from the uncovered leg, which is exactly where the risk lives.

Priced off the guide's shared chain, on a $50 stock. Every figure beneath the diagram is computed from these legs by the same engine the Strategy Builder uses.

Roughly flat at a small credit above the long strike.

Rising to a peak at the short strike, where the long put is at its most valuable relative to the shorts.

Then falling, and continuing to fall — the tail does not flatten, because one short put is uncovered.

It suits a view that a stock drifts down to a level and stops. The peak is placed at that level.

The uncovered short means capital is set by margin rules rather than by a spread width, and the position can require more collateral than the credit suggests.

A broken-wing butterfly is the related idea with the tail closed — one more long option converts the open-ended risk into a defined one.

Like everything in this guide, these are descriptions of structures and conditions — context for your own decisions, not instructions to trade.