I am pretty baffled with the profit to loss ratios on long spreads and long naked options. Example: XLF (currently at $16.51) Jan 2012 puts: $11- .35 $12 - .46 . $15- 1.16 $16- 1.57 For a long naked $12 strike option, it is about 3.4 times at $16 (1.57 / .46 = 3.4). If I bought a long spread at the same $12 strike which I would only risk 0.11, it would be roughly about 3.7 times at $16... (.41 / .11 = 3.7) I've compared a few other stocks and it seems to me that the profit to loss ratio is almost the same thing. So why hedge with a spread? Especially, when naked options actually have a higher profit potential...? What am I missing here?