I'm just running through some examples of

**Call Ratio Backspreads** (learning how to do them is probably more accurate):

I'm having issues with what formula/equations to use. I have found 2 formula for

**Max Risk** and

**Lower Breakeven** but the answers aren't equal ??

Can anyone see what I'm doing wrong - Thanks.

Heres what I have:

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MER trading @ $86.20 (live example from 18th July)

Buy 3 MER Jan $95 Calls @ $3.80

Sell 2 MER Dec $75 Call @ $14.90

Net Credit = (Short Premiums – Long Premiums) x 100 = ($14.90 x 2 – $3.80 x 3) x 100 = $1840

Max Risk: (2 formulae for this)

(1) = (Difference in strikes x 100) – Net Credit = ($20 x 100) - $1840 =

**$160** **???**
(2) = [(# Short Calls x Diff. in Strikes) – Net Credit) x 100 = [(2 x $20) – $18.40)] x 100 =

**$1270** **???**
Max Reward = Unlimited to the upside beyond breakeven

Breakeven Upper: (2 formulae for this)

(1) = (# Short Calls x Diff. in strikes) + Higher Strike – Net Credit = (2 x $20) + $95 – $18.40 = $116.60

(2) = Higher Strike + [(Diff. in strikes x # Short Calls) / (# Long Calls - # Short Calls)] – Net Credit = $95 + [($20 x 2) / (3 - 2)] – $18.40 = $116.60

Breakeven Lower: (2 formulae for this)

(1) = (Net Credit / # Short Calls) + Lower Strike = ($18.40 / 2) + $75 =

**$84.20** **???**
(2) = Lower Strike + Net Credit = $75 + $18.40 =

**$93.40** **???**
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