Jade
Lizard

What it is

A jade lizard combines a short out-of-the-money put with a short out-of-the-money call spread (sell a call, buy a higher call). You collect three premiums. The trick: if the total credit is at least the width of the call spread, the upside is fully covered — a rally costs you nothing. The only real exposure is to the downside, from the naked short put.

Key facts

• Market view: neutral-bullish — happy if price stays up or rangebound.
• Construction: Sell 1 OTM put + Sell 1 OTM call spread (sell a call, buy a higher call).
• Net cost: a net credit.
• Max profit: the total credit received, kept if price stays between the put and short call.
• Max loss: downside only — (put strike − credit) per share, like short stock far below.
• Breakeven: on the downside at put strike − total credit; none on the upside.

How to construct it

• Sell an OTM put below the market.
• Sell a call above the market and buy a further-OTM call to cap the upside, keeping total credit ≥ the call-spread width.

Worked NIFTY example

Suppose NIFTY is near 22,500. Sell the 22,200 put for 90, sell the 22,800 call for 70, buy the 22,900 call for 30 (illustrative):

• Total credit: 90 + 70 − 30 = 130; the call spread is only 100 wide, so 130 ≥ 100 → no upside risk.
• Max profit: 130 per share (×75 lot ≈ ₹9,750) if NIFTY stays between 22,200 and 22,800.
• Downside breakeven: 22,200 − 130 = 22,070; below that you lose like short stock.

When to use it

• You are neutral-to-bullish and comfortable owning the downside near the put strike.
• Implied volatility is elevated, fattening the premiums you sell.

Risks to respect

• The short put leaves large downside exposure if the index falls sharply.
• Three legs mean three sets of charges and assignment to monitor.

Related strategies

• Cash-Secured Put — the downside leg, standalone.
• Bear Call Spread — the upside leg, standalone.
• What is implied volatility?