Strategy thinking
Jade lizards: getting paid to be slightly bullish
A short put plus a short call spread, sized so the credit beats the call spread width. Zero upside risk by construction. The trade I run when IV is high and I lean bullish.
The jade lizard is the trade I reach for when IV is high and I have a soft bullish lean on a name. It is a short put paired with a short call spread, sized so that the total premium collected is greater than the width of the call spread. That sizing is everything.
Why the credit-greater-than-width rule matters
If your total credit exceeds the call spread width, you cannot lose money to the upside. The math is simple. If the stock rallies past your call spread, you lose the spread width minus the credit. If credit exceeds width, that loss is negative, which means you keep money. Free upside.
The jade lizard is one of the few trades where you can stop watching the upside entirely.
The structure
Pick a name with above 50 and a 30 to 45 DTE expiration.
- Sell the 0.30 delta put.
- Sell the 0.30 delta call.
- Buy a call one strike higher to define the upside risk.
- Confirm the total credit exceeds the call spread width.
If the math does not work, the IV is not high enough. Walk away or pick a different name.
What kills it
The downside. A jade lizard has all the downside risk of a short put. If the stock crashes through your put strike, you can lose down to zero (minus the credit). This is why you only run jade lizards on names you would happily own at the put strike. If you would not own it, do not sell the put.
What to do next
Look at the scanner for jade lizards. For each one, confirm two things: IV rank above 50, and credit greater than the call spread width. Without both, the structural edge is gone.