The ratio-spread is a name given to a strategy in options trading and that strategy involves buying some number of options and selling a larger number of other options of the same underlying market and (usually) the same expiration date, but of a different strike price.
The ideal situation when this strategy should be used is when either :
A) the implied volatility of the options that are expiring in a particular month has recently shown a sharp higher movement and is now beginning to decline, or
B) it is anticipated by the trader for whatever reason that during the life of the option the underlying market of the option(s) will move steadily in his favor.
