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The exact opposite trade of a Put Ratio Backspread: buy fewer puts than you sell, collecting a smaller net cost but leaving large downside risk on a sharp fall.

A Put Front Ratio Spread buys a smaller number of puts at a higher strike and sells a larger number of puts at a lower strike — most commonly a 1:2 ratio, used throughout this page. Being net short more puts than you're long is what leaves the position with large risk on a sharp fall — the opposite of a Put Ratio Backspread, which is net long and has large profit potential instead of large risk.

Counting contracts: +1 (bought) − 2 (sold) = net −1. Below the lower strike, this behaves increasingly like a naked Short Put, with the loss growing as the underlying keeps falling.

Three zones, not symmetric:

1. At or above the higher strike — a flat, capped loss. Both legs expire worthless, and you lose exactly the net debit paid.
2. Between the two strikes — profit grows as the underlying falls, peaking exactly at the lower strike.
3. Below the lower strike — profit shrinks, crosses into loss at the lower breakeven, and then keeps growing as the underlying keeps falling.

A Front Ratio Spread (Put) fits a view that's neutral to moderately bearish, with real conviction that a large fall is unlikely — the strategy's best outcome is the underlying landing exactly at the lower strike, not falling well past it. It's cheaper to enter than a comparable defined-risk spread, in exchange for accepting large downside risk on a big move.

Suppose Nifty is trading at 24,000 with a weekly expiry coming up, and lot size is 65. You expect a moderate fall, but not a sharp one.

1. Confirm the setup, including the risk you're accepting. You expect Nifty near 23,700, but not much further down, and accept large risk if it falls hard.
2. Buy 1 put at the 24,000 strike for a premium of 140.
3. Sell 2 puts at the 23,700 strike, collecting a premium of 58 each — 116 total.
4. Calculate the net debit: 140 − 116 = 24 points, or ₹1,560 at this lot size — your maximum loss only if Nifty stays flat or rises.
5. Understand the peak: exactly at 23,700, maximum profit of ₹17,940.
6. Understand the uncapped side: below 23,424, losses grow as Nifty keeps falling.
7. See how it resolves at expiry:
   • Nifty finishes at or above 24,000 → capped loss of ₹1,560.
   • Nifty finishes exactly at 23,700 → maximum profit of ₹17,940.
   • Nifty finishes well below 23,424, say at 22,500 → a large, growing loss.

Quick reference for the same trade:

Based on the worked example above — the exact mirror image of the Put Ratio Backspread page's diagram. Move the cursor over the chart to see profit/loss at any price.

• The downside risk is large and effectively unbounded within the usual sense that applies to any short put position — the single most important thing to understand before using this strategy.
• Margin requirements reflect that large downside risk and will be substantial.
• The strategy specifically wants the underlying to land near the lower strike, not fall well past it.
• Index options on NSE are typically European-style and cash-settled — no early-assignment risk on the short legs before expiry.