Watch the reel
A jade lizard sells a put and a call spread so the total credit removes all upside risk — you only have risk to the downside. This reel shows how the structure is built.
Jade Lizard
A short put combined with a short call spread, structured so the total credit collected is greater than the width of the call spread — eliminating upside risk entirely. Downside risk remains.
Payoff at expiration
Example legsGreeks
When to use it
Bullish-to-neutral view, elevated IV, and you want premium with no upside risk. Especially useful on names you'd be willing to own at the short put strike.
Setup
Sell an OTM put. Sell an OTM call spread. The combined credit must exceed the call spread width to remove upside risk.
Steps
- 1Pick a 30–45 DTE expiration.
- 2Sell the OTM put at a price you'd own the stock.
- 3Sell the OTM call.
- 4Buy a further OTM call. Verify total credit > call spread width.
- 5Submit as a single 3-leg combo.
Cost
Net credit (required: credit > call spread width). Max profit = total credit. Max loss on downside = short_put − total_credit.
Effect of price
Above the long call: full max profit. Between short strikes: max profit. Below short put: losses accelerate, capped only by stock going to zero.
Effect of time
Theta-positive.
Effect of volatility
Negative vega.
Pros
- Zero upside risk.
- Theta-positive.
- High probability of profit on appropriate underlyings.
Cons
- Full downside exposure below the short put.
- Three legs to manage.
- Requires elevated IV to make the math work.
Tips
- Only on names you'd genuinely own at the short put strike.
- Close at 25–50% of max credit.
- Manage the short put aggressively if tested.
The math
Max profit = total_credit (at spot ≥ short_call_strike). Max loss = short_put_strike − total_credit (at spot = 0). No loss above short_call_strike when total_credit > call_spread_width.
Not investment advice.
