Jade Lizard
Quick Definition
An options strategy combining a short put with a short call spread, structured so there is no upside risk if the total credit exceeds the call spread width.
What Is Jade Lizard?
A jade lizard is an options strategy that combines selling a naked (or cash-secured) put option with selling a call vertical spread (bear call spread) on the same underlying. The key feature is that when properly structured, the total credit received equals or exceeds the width of the call spread, eliminating risk to the upside. Risk remains only to the downside from the short put. The strategy profits when the underlying stays flat or rises moderately. It is favored by traders who are neutral to slightly bullish and want to collect premium without upside risk. The name "jade lizard" was coined by options trading firm tastytrade. It works best when put implied volatility is elevated relative to call implied volatility (volatility skew), allowing the put to generate substantial premium.
Jade Lizard Example
- 1Sell $95 put for $2.50 and sell $105/$110 call spread for $2.70, total credit $5.20. Since $5.20 > $5 (call spread width), there is zero risk above $105
- 2A trader puts on a jade lizard in a stock with elevated put skew, collecting $3.80 total credit against a $3-wide call spread — no upside risk, downside risk below $46.20
Related Terms
Short Put
Selling a put option to collect premium, obligating the seller to buy shares at the strike price if assigned, with risk down to the stock reaching zero.
Short Call
Selling a call option to collect premium, obligating the seller to deliver shares at the strike price if assigned, with theoretically unlimited risk if uncovered.
Vertical Spread
An options strategy involving buying and selling options of the same type and expiration but at different strike prices.
Cash-Secured Put
An options strategy where a trader sells a put option while holding enough cash to purchase the underlying stock if assigned.
Strangle
An options strategy involving the purchase (or sale) of an OTM call and OTM put at different strikes with the same expiration, a wider alternative to a straddle.
Call Option
A contract giving the holder the right, but not the obligation, to buy an underlying asset at a specified price within a specified time period.
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