← Back to Playbook

Ratio Put Spread

directional Uncapped risk

Advanced: profit from a moderate, measured drop.

⚠ Negative expectancy in backtests — taught as an advanced concept, excluded from income picks.
When to use it

Sell 1 put, buy 2 lower puts. Profits from a moderate decline but carries downside risk below the long strikes. Advanced only.

Max profit

Near the long strikes at expiry.

Max loss

Significant below the long puts.

Payoff at expiry
illustrative shape — not to scale
■ profit zone ■ loss zone X axis = stock price at expiry →
How it's built

Strikes shown low→high. Sell = collect premium · Buy = pay premium for protection or upside.

Hermes-evaluated setups

High-conviction per-ticker applications — setups with a confidence-adjusted win rate ≥ 80% over ≥20 backtested trades (95% lower bound — honest for the sample size, never a raw 100%). Avg P/L is the mean profit/loss per one-contract position.

Ticker Win Rate Avg P/L Sharpe Trades DTE
COST 92% +$286 5.0 42 43
PL 90% +$51 2.6 51 24
GEV 89% +$714 5.3 31 17
UMAC 89% +$34 4.3 31 18
CIFR 89% +$41 3.2 31 44
KOPN 86% +$17 1.7 80 22
NBIS 81% +$352 2.2 34 11
RDDT 80% +$313 2.0 55 9
WT 80% +$10 1.3 81 10

Backtested results are not a guarantee of future performance.