Ratio spreads are like the bull and bear spreads except that the number of calls bought and sold at the different strikes are not equal. Consider that you buy a call with K$=100$ on stock VVVX and you write two calls on VVVX with K$=105.$ These two calls you are told are currently trading for $1\mathrm{.}21$ and $3\mathrm{.}09$ and both expire in one month.

What is the cost of creating the above ratio spread strategy?

What will be the cost of a ratio spread created by shorting three K$=105$ calls for every K$=100$ call that you buy? Please analyze each of the above strategies and provide the rationale as to when will you use them if you are a speculator?

D$.$ Can you interpret what these ratio spreads are?