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Strategies

Jade Lizard

Neutral to mildly bullish premium strategy built from a short put and a bear call spread.

Description

What the strategy consists of

The classic Jade Lizard consists of one short put and one bear call spread in the same expiration.

That keeps upside controlled while the real risk begins below the short put.

The setup often becomes more attractive in higher IV because the credit can be richer.

P/L Diagram

Schematic at expiration

Jade Lizard

Jade LizardThe line shows the result along the labelled price axis. Assumptions and legs are listed below.P/L per share (USD)-100108090100110120Underlying at expiry (USD)
Example credit: 6 USDBE: 89 USDAbove 110: +100 USD/contract
  • Short Put 95
  • Short Call 105
  • Long Call 110
Assumed total credit of 6 USD exceeds the 5-USD call spread width. This leaves upside profitable; losses begin below 89 USD. Put risk extends down to zero. Expiry P/L per share; × 100 per standard contract, excluding fees.

Summary

What matters most

  • Direction Neutral to mildly bullish.
  • Structure Short put plus bear call spread.
  • Strength Rich premium with controlled upside.
  • Drawback Real downside below the short put.