Call Ratio Backspread Nifty Midcap Select: Setup, Payoff and Risk Guide

The this strategy inverts the logic of the ratio call spread: instead of selling more options than are bought, it buys more than it sells. This shifts the unlimited exposure from the downside of the trade (as in a ratio call spread) to a position that benefits from a large upside move, while keeping the loss capped at a specific, calculable level in the middle zone between the strikes.

Because the call ratio backspread Nifty Midcap Select buys more options than it sells, it is often structured for a smaller net debit, and in some cases even a net credit, depending on the strikes and the implied volatility skew between them.

Click Here – Get Free Investment Predictions

What Is the The position?

The call ratio backspread Nifty Midcap Select is a multi leg options strategy that sells calls at one strike and buys a larger number of calls at a higher strike, all on the same expiry. The most common version, the 1 by 2 this trade, sells one call and buys two calls.

The legs of a 1 by 2 call ratio backspread Nifty Midcap Select are:

• Sell one call at the lower strike, generating premium and defining part of the risk profile
• Buy two calls at the higher strike, providing unlimited upside exposure through the uncovered extra long call

The first bought call is offset by the short call, forming a standard vertical spread in reverse. The second bought call is uncovered on the upside, meaning the this options approach carries unlimited profit potential if the index rallies significantly, similar to holding an extra outright long call beyond the vertical spread structure.

How Does the Call Ratio Backspread Nifty Midcap Select Work?

With Nifty Midcap Select at Rs 13,850, a 1 by 2 the spread might sell a call near 13,850 and buy two calls near 13,950. Between the two strikes, the position can show its maximum loss, but beyond the long strike, the uncovered extra long call drives unlimited profit potential as Nifty Midcap Select continues to rise.

Parameter	Details
Index	Nifty Midcap Select (MidcpNifty) (NSE)
Expiry	Monthly only, last Tuesday of the month. Effective September 2025 (NSE index expiry swap). Weekly contracts discontinued November 2024.
Lot Size	120 units (effective from January 2026 per NSE circular, reduced from 140)
Strategy Type	Bullish on a large move, defined maximum loss, unlimited upside
Legs	3 (1 short call, 2 long calls at a higher strike, in a 1 by 2 ratio)
Max Profit	Unlimited above the upper breakeven
Max Loss	Defined, occurring at or near the long strike
Margin	Varies dynamically. Check live margin on your broker's calculator before placing any order.

Call Ratio Backspread Nifty Midcap Select: Step by Step Setup

1. Select the short call strike. With Nifty Midcap Select at Rs 13,850, a strike near or at the current level, such as 13,850, is a common starting point for the this strategy.
2. Select the long call strike and ratio. A higher strike, such as 13,950, is bought in a greater quantity than the short call, commonly at a 1 by 2 ratio for the call ratio backspread Nifty Midcap Select.
3. Calculate the net debit or credit. This equals the premium paid for the two long calls minus the premium received from the short call, multiplied by the lot size, for the the position.
4. Identify the maximum loss zone. Unlike a simple vertical spread, the call ratio backspread Nifty Midcap Select typically shows its worst outcome at or near the long strike, not below the short strike or far above the long strike.
5. Confirm the position aligns with your market view. The this trade benefits most from either a large rally or, if entered for a net credit, from the index staying flat or falling, since the small credit would then be retained as profit.

Illustrative Payoff: Call Ratio Backspread Nifty Midcap Select

Illustrative example for educational purposes only. Strikes and premiums are hypothetical and should not be interpreted as a trade recommendation.

Hypothetical setup: Sell one 13,850 CE at Rs 190 per unit. Buy two 13,950 CE at Rs 95 per unit each. Net debit: Rs 0 per unit. Lot size: 120 units.

Nifty Midcap Select at Expiry	P&L Per Lot (approx, Rs)	Outcome
At or below 13,850	-0 (net debit lost)	All calls expire worthless; net credit or debit determines outcome
Near 13,950	-12,000 (maximum loss, illustrative)	Short call losses not yet offset by the two long calls
Well above 13,950	Growing profit, unlimited	Extra uncovered long call drives unlimited upside profit

The call ratio backspread Nifty Midcap Select illustrates a distinctive payoff shape: a defined worst case in the middle zone, with unlimited profit potential on a large enough rally, the opposite risk shape from the ratio call spread covered elsewhere in this series.

Greeks for the Call Ratio Backspread Nifty Midcap Select

Delta: The call ratio backspread Nifty Midcap Select generally starts with a modest positive delta that increases as the index rises past the long strike, reflecting the growing dominance of the uncovered long call.

Gamma: The call ratio backspread Nifty Midcap Select has positive gamma concentrated above the long strike, meaning the position becomes increasingly responsive to further upside moves in the favourable direction.

Theta: Theta is often negative for the call ratio backspread Nifty Midcap Select since two long options decay against one short option, generally working against the position if the index stays flat.

Vega: The call ratio backspread Nifty Midcap Select is generally long vega, since the two long calls outweigh the vega exposure of the single short call. A rise in implied volatility after entry is generally favourable.

When the Call Ratio Backspread Nifty Midcap Select May Be Considered

The call ratio backspread Nifty Midcap Select may be considered when a trader expects a significant rally in the index, wants unlimited upside participation with a defined and calculable maximum loss, or is entering the position for a net credit and is comfortable with the index staying flat or declining as an acceptable outcome.

When NOT to Use the Call Ratio Backspread Nifty Midcap Select

Consider avoiding the call ratio backspread Nifty Midcap Select when you expect the index to move moderately rather than dramatically, since the maximum loss zone sits precisely in that moderate range; when implied volatility is very high, making the long call leg expensive; or when you are not comfortable managing a three leg position with a non intuitive payoff shape.

Risk Management

The call ratio backspread Nifty Midcap Select has a defined and calculable maximum loss, which should be confirmed at entry. Because the worst outcome occurs in the middle zone rather than at either extreme, traders should understand this non intuitive payoff shape before entering the call ratio backspread Nifty Midcap Select and plan exits accordingly if the index approaches the long strike without breaking through it.

Transaction Costs

The call ratio backspread Nifty Midcap Select involves three option contracts (one short, two long in a 1 by 2 ratio), each with its own transaction costs. Brokerage, exchange transaction charges, STT, GST, SEBI charges, stamp duty, and bid ask spread impact across three legs should be weighed against the net credit or debit involved.

Use Univest Screener to Identify the Best F&O Setups

Call Ratio Backspread vs Other Nifty Midcap Select Bullish Strategies

Strategy	Max Profit	Max Loss	Worst Case Location	Complexity
Call Ratio Backspread	Unlimited above upper breakeven	Defined, at the long strike	Middle zone (at long strike)	High
Ratio Call Spread	Defined, at short strike	Unlimited above upper breakeven	Above the short strike	High
Bull Call Spread	Defined (spread minus debit)	Defined (net debit)	Below the lower strike	Low Medium

The call ratio backspread Nifty Midcap Select is the mirror image of the ratio call spread: where the ratio call spread caps profit and leaves risk uncapped above the short strike, the call ratio backspread Nifty Midcap Select caps risk in the middle zone and leaves profit uncapped on a large rally.

Download the Univest iOS App or Univest Android App to track option chains and monitor your F&O positions.

Conclusion

The call ratio backspread Nifty Midcap Select offers unlimited upside participation with a defined and calculable maximum loss, making it structurally distinct from both simple vertical spreads and the ratio call spread. Its non intuitive payoff shape, with the worst outcome in the middle rather than at either extreme, requires careful understanding before use. Always verify current lot size (120 units from January 2026) and expiry schedule before executing any trade, and consult a SEBI registered investment advisor if you are new to multi leg options strategies.

Frequently Asked Questions

What is the call ratio backspread Nifty Midcap Select?

Ans. The call ratio backspread Nifty Midcap Select sells one call at a lower strike and buys a larger number of calls, commonly two, at a higher strike, on the same expiry. It has a defined maximum loss in the middle zone but unlimited profit potential on a large rally.

How does the call ratio backspread Nifty Midcap Select differ from the ratio call spread?

Ans. The ratio call spread sells more calls than it buys, capping profit but leaving risk uncapped above the short strike. The call ratio backspread Nifty Midcap Select does the reverse, buying more calls than it sells, capping risk in the middle zone but leaving profit uncapped on a large rally.

What is the maximum loss in the call ratio backspread Nifty Midcap Select?

Ans. The maximum loss in the call ratio backspread Nifty Midcap Select is defined and typically occurs at or near the long strike, not at either extreme of the possible index range.

Can the call ratio backspread Nifty Midcap Select be entered for a net credit?

Ans. Yes, depending on the strikes and implied volatility skew, the premium received from the short call can sometimes exceed the combined cost of the two long calls, resulting in a net credit at entry for the call ratio backspread Nifty Midcap Select.

What is the current lot size for Nifty Midcap Select options?

Ans. The Nifty Midcap Select lot size is 120 units effective from January 2026, reduced from 140. Always verify the current lot size on nseindia.com before placing any order.

Is the call ratio backspread Nifty Midcap Select suitable for beginners?

Ans. The call ratio backspread Nifty Midcap Select has a non intuitive payoff shape with the worst outcome in the middle zone, making it generally unsuitable for beginners. It is better suited to traders who already understand ratio spreads and multi leg risk profiles.