Call Back Spread
Options strategy · Level 3 · Spreads & short options
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Sell one call and buy two higher-strike calls. The two long calls pay for the short one, so it can be opened for a credit. You lose a limited amount if the stock stalls near the long strike, and gain without limit on a big rise.
Where Tradecraft teaches it
Level 3 · Spreads & short options, in the lesson “Back spreads: long volatility, capped loss”: Sell one option, buy two further out: a capped loss, a big gain on one side, and long volatility.
Related terms
- Call Ratio SpreadBuy one call and sell two higher-strike calls.
- Put Back SpreadSell one put and buy two lower-strike puts.
- Put Ratio SpreadBuy one put and sell two lower-strike puts.
- Back-spread danger zoneWhere a back spread loses the most at expiry: the stock sitting at the long strike.
- Broken-Wing ButterflyA butterfly with one wing pushed out: buy one call, sell two, and buy one much further away, so the two wings are different widths.
- Calendar Spread – DebitSell a near-term option and buy a longer-term option at the same strike.