Jade Lizard

What is a jade lizard?

A jade lizard is a three-leg options strategy that combines a short put with a bear call spread at higher strikes, all in one expiration, for a net credit. When total credit after costs exceeds the call spread’s width, the position has a positive expiration payoff above the long call strike. The main risk sits below the short put, where the payoff drops as the stock falls.

The trade sells a put, sells a higher-strike call, and buys a still-higher-strike call. All three legs share the underlying, expiration, contract deliverable, and quantity, and the two calls form the bear call spread.

Compare total credit with the call-spread width. At expiration above the long call, profit before costs equals credit minus width. A greater credit leaves a positive payoff in that region; an equal credit leaves zero.

Jade lizard vs short put and short strangle

Against a short put alone, adding the bear call spread contributes additional credit. Against a short strangle with the same short strikes, buying the higher call reduces credit and fixes the upper expiration payoff.

Jade lizard P&L before expiration

Calculate the complete package’s net delta, gamma, theta, and vega from its current options. Reprice all three legs across the stock prices, dates, and volatility inputs in the trade plan. Closing profit equals opening credit minus the debit paid to close. The options profit calculator compares the full-credit interval, upper payoff, downside breakeven, current value, and target-date outcomes in one view.

How to choose jade lizard strikes

Use price structure, gamma exposure, and options flow to choose the stock-price scenarios to compare. The two short strikes define the full-credit expiration interval. The put breakeven and zero-price loss define the downside dollar exposure.

Read matching three-leg prints as a package by checking quantity, expiration, execution details, and the higher long-call strike.

Managing a jade lizard and assignment

Use a combined order with a net price limit. To close, buy back the short put and call and sell the long call. A physically settled short put assignment buys shares at the put strike; a short call assignment sells shares at the call strike. Plan those transactions and the remaining options when holding through exercise or expiration.

Risks and limitations of jade lizards

• Size the position from the downside. Below the $89.80 breakeven the position loses $100 for each $1 decline, and the loss reaches $8,980 if the stock goes to zero.
• Keep total costs under the upside cushion. The upper expiration payoff covers costs only when credit minus call-spread width is at least those costs: the example leaves a $20 gross cushion, and $25 in total costs would turn a finish above $110 into a $5 net loss.
• Plan an exit for a rally into the call spread. Between $105 and $110 the short call gives back $100 for each $1 rise, so a finish at $107 keeps only $320 of the $520.
• Plan for early assignment on both short legs. On American-style contracts the short put and short call can be assigned, creating a 100-share purchase or sale while the other legs stay open.
• The package is often short vega at entry, but its net vega can change sign as price, time and volatility move. Sum the current leg vegas before estimating how an IV change affects the cost to close.

Bottom line

Collect more than the call spread’s width, $520 against $500 here, and keep total costs under that $20 cushion: the jade lizard then has no upside loss at expiration, so the whole trade rests on the 95 put. Open it on a stock you are prepared to own at $95, and size it from the loss below the $89.80 breakeven.