The short ratio put spread involves buying one put (generally at the money) and selling two puts of the same expiration but with a lower strike. This strategy is the combination of a bear put spread and a naked put, where the strike of the naked put is equal to the lower strike of the bear put spread.
The investor is ideally hoping for a slow rally up to the strike where they have sold two calls or a sharp fall in implied volatility during the life of the options.
This strategy can profit from a slight rise, a steady stock price or a falling implied volatility. The actual behavior of the strategy depends largely on the Delta, Theta, and Vega of the combined position as well as whether a debit is paid or a credit received when initiating the position.
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