Jade Lizard Calculator

Income & CreditneutralUndefined Risk

Sell an OTM put and an OTM call spread to collect credit with no upside risk when the credit exceeds call spread width.

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What Is a Jade Lizard?

A jade lizard is a three-leg credit strategy that combines a short out-of-the-money put with a short out-of-the-money call spread in the same expiration. You sell a put below the current price, sell a call above it, and buy a further out-of-the-money call to cap the call side. The defining rule is that the total credit collected must be at least as large as the width of the call spread. When that holds, the trade cannot lose money if the stock rallies, no matter how far it goes.

The position is neutral to slightly bullish. It earns the full credit if the stock finishes between the short put and the short call, keeps most of the credit on a modest rally, and still keeps a small amount even on a large rally because the credit covers the call spread. The only real risk is to the downside, where the naked short put loses dollar for dollar below the breakeven all the way to zero.

The payoff diagram looks like a short put with the upside flattened. It rises from the left, reaches a plateau equal to the full credit between the short strikes, steps down by the width of the call spread on the way up, and then runs flat at a small positive value. Compared with a short strangle, it gives up some credit for the call wing and removes the unlimited upside risk entirely. Compared with a plain short put, it collects more credit for the same downside exposure.

Setup

SELL1x OTM2 PUT

SELL1x OTM1 CALL

BUY1x OTM3 CALL

Max Profit

Net credit received

Max Loss

Short put strike - net credit if stock falls to $0

Breakeven

Short put strike - net credit

Jade Lizard Example

XYZ trades at $100 with 45 days to expiration and elevated implied volatility. You sell the $95 put for $3.60, sell the $105 call for $3.40, and buy the $110 call for $1.90. Total collected is $7.00 and total paid is $1.90, so the trade opens for a net credit of $5.10 per share, or $510. The call spread is $5 wide, and the $5.10 credit exceeds that width by $0.10.

Stock at expiration	Result
$100 (unchanged)	All three options expire worthless. You keep the full $510 credit, the maximum profit. The same is true anywhere between $95 and $105.
$120 (large rally)	The $95 put expires worthless. The short $105 call costs $15.00 ($1,500) and the long $110 call is worth $10.00 ($1,000), so the call spread loses $500. P&L is $510 minus $500, or $10, and it stays at $10 for any price above $110.
$89.90	Breakeven. The calls expire worthless and the $95 put is $5.10 in the money, costing $510, which exactly cancels the credit.
$85	The calls expire worthless. The $95 put is $10.00 in the money, costing $1,000. Loss is $1,000 minus the $510 credit, or −$490. Each further dollar of decline adds $100 to the loss.

Maximum profit is $510 if XYZ finishes between $95 and $105. There is no upside risk because the credit exceeds the $5 call spread width, leaving a $10 profit even on an unlimited rally. The only breakeven is $89.90, and the maximum loss is $8,990 if XYZ falls to zero.

When to Use a Jade Lizard

You are neutral to mildly bullish and would be comfortable owning the stock at the short put strike if assigned.
Implied volatility is elevated, particularly in the puts, so the short put and short call bring in enough combined credit to cover the call spread width.
You want to sell a put but would like extra credit to lower the breakeven, without adding any risk on the upside.
You want a short strangle style trade but cannot accept or margin the unlimited upside exposure.
Typical entries use 30 to 60 days to expiration, sell the put around the 20 to 30 delta, and place the short call just above a resistance level with a wing $2.50 to $5 higher.

Risks to Understand

Downside risk is the same as a naked short put. A gap lower through the breakeven loses $100 per dollar, and the theoretical maximum loss is the short put strike minus the credit, times 100.
If the credit collected is less than the call spread width, the trade is not a true jade lizard and does carry a defined loss on the upside equal to the shortfall.
The short put ties up significant margin or, in a cash-secured account, the full strike value, so returns on capital are modest for the risk taken.
A rise in implied volatility inflates the short put and short call, causing a mark-to-market loss even if the stock sits comfortably between the strikes.
The short put can be assigned early when it is deep in the money or shortly before an ex-dividend date, converting the position into long stock plus a short call spread.

Managing the Trade

Many traders close the whole position at 50 percent of the maximum credit, since holding for the remaining half exposes the short put to gamma for little additional reward.
If the stock rallies through the short call, the call spread can be left alone, because the credit already covers its width and the outcome above the long call is a small profit.
If the stock drops toward the short put, roll the put down and out to a later expiration for a credit, or roll the call spread down to collect more premium and lower the breakeven.
Set a downside stop at roughly two times the credit received, or at a technical level below the short put, and honor it, because the put side has no built-in floor.
Avoid holding into the final week if the stock is near the short put, when assignment and pin risk make the result unpredictable.

Jade Lizard FAQs

What is a jade lizard options strategy?: A jade lizard sells an out-of-the-money put and an out-of-the-money call spread in the same expiration, collecting a net credit that is greater than or equal to the width of the call spread. That condition removes all upside risk. The trade profits if the stock stays flat, rises, or falls modestly, and loses only on a sharp decline.
How do you calculate jade lizard max profit and max loss?: Maximum profit is the net credit received times 100, earned when the stock expires between the short put and the short call. Maximum loss is the short put strike minus the net credit, times 100, reached if the stock falls to zero. With a $95 short put and a $5.10 credit, max profit is $510 and max loss is $8,990.
Why does a jade lizard have no upside risk?: Above the long call, the call spread loses its full width and nothing more, while the put expires worthless. If the credit collected is at least that width, the credit covers the loss and the trade finishes with a small profit or breaks even. In the example the $5.10 credit against a $5 spread leaves $10 of profit on any rally.
Jade lizard vs iron condor: what is the difference?: An iron condor buys a protective put wing, capping downside loss but reducing the credit. A jade lizard skips the put wing, collects more credit, and uses it to eliminate upside risk instead. The condor suits traders who want defined risk on both sides. The jade lizard suits traders willing to own the stock who want a higher credit and lower breakeven.
Jade lizard vs short strangle: which is better?: A short strangle collects more credit but has unlimited upside risk and requires more margin. A jade lizard gives up part of the credit to buy the call wing, which removes the upside risk completely if the credit still exceeds the spread width. For most traders the jade lizard is the more conservative choice on the upside with identical exposure on the downside.
What happens if the stock falls below the short put in a jade lizard?: The short put goes in the money and the position loses $100 per dollar below the breakeven, which is the put strike minus the credit. At expiration you can be assigned 100 shares at the put strike. The calls expire worthless and the credit reduces your effective purchase price to $89.90 in the example.

Related Strategies

Big Lizard Short Put (Naked Put)Bear Call Spread

What Is a Jade Lizard?

Jade Lizard Example

Stock at expiration	Result
$100 (unchanged)	All three options expire worthless. You keep the full $510 credit, the maximum profit. The same is true anywhere between $95 and $105.
$120 (large rally)	The $95 put expires worthless. The short $105 call costs $15.00 ($1,500) and the long $110 call is worth $10.00 ($1,000), so the call spread loses $500. P&L is $510 minus $500, or $10, and it stays at $10 for any price above $110.
$89.90	Breakeven. The calls expire worthless and the $95 put is $5.10 in the money, costing $510, which exactly cancels the credit.
$85	The calls expire worthless. The $95 put is $10.00 in the money, costing $1,000. Loss is $1,000 minus the $510 credit, or −$490. Each further dollar of decline adds $100 to the loss.

When to Use a Jade Lizard

You are neutral to mildly bullish and would be comfortable owning the stock at the short put strike if assigned.

Implied volatility is elevated, particularly in the puts, so the short put and short call bring in enough combined credit to cover the call spread width.

You want to sell a put but would like extra credit to lower the breakeven, without adding any risk on the upside.

You want a short strangle style trade but cannot accept or margin the unlimited upside exposure.

Typical entries use 30 to 60 days to expiration, sell the put around the 20 to 30 delta, and place the short call just above a resistance level with a wing $2.50 to $5 higher.

Risks to Understand

Downside risk is the same as a naked short put. A gap lower through the breakeven loses $100 per dollar, and the theoretical maximum loss is the short put strike minus the credit, times 100.

If the credit collected is less than the call spread width, the trade is not a true jade lizard and does carry a defined loss on the upside equal to the shortfall.

The short put ties up significant margin or, in a cash-secured account, the full strike value, so returns on capital are modest for the risk taken.

A rise in implied volatility inflates the short put and short call, causing a mark-to-market loss even if the stock sits comfortably between the strikes.

The short put can be assigned early when it is deep in the money or shortly before an ex-dividend date, converting the position into long stock plus a short call spread.

Managing the Trade

Many traders close the whole position at 50 percent of the maximum credit, since holding for the remaining half exposes the short put to gamma for little additional reward.

If the stock rallies through the short call, the call spread can be left alone, because the credit already covers its width and the outcome above the long call is a small profit.

If the stock drops toward the short put, roll the put down and out to a later expiration for a credit, or roll the call spread down to collect more premium and lower the breakeven.

Set a downside stop at roughly two times the credit received, or at a technical level below the short put, and honor it, because the put side has no built-in floor.

Avoid holding into the final week if the stock is near the short put, when assignment and pin risk make the result unpredictable.

Jade Lizard FAQs

What is a jade lizard options strategy?

A jade lizard sells an out-of-the-money put and an out-of-the-money call spread in the same expiration, collecting a net credit that is greater than or equal to the width of the call spread. That condition removes all upside risk. The trade profits if the stock stays flat, rises, or falls modestly, and loses only on a sharp decline.

How do you calculate jade lizard max profit and max loss?

Maximum profit is the net credit received times 100, earned when the stock expires between the short put and the short call. Maximum loss is the short put strike minus the net credit, times 100, reached if the stock falls to zero. With a $95 short put and a $5.10 credit, max profit is $510 and max loss is $8,990.

Why does a jade lizard have no upside risk?

Above the long call, the call spread loses its full width and nothing more, while the put expires worthless. If the credit collected is at least that width, the credit covers the loss and the trade finishes with a small profit or breaks even. In the example the $5.10 credit against a $5 spread leaves $10 of profit on any rally.

Jade lizard vs iron condor: what is the difference?

An iron condor buys a protective put wing, capping downside loss but reducing the credit. A jade lizard skips the put wing, collects more credit, and uses it to eliminate upside risk instead. The condor suits traders who want defined risk on both sides. The jade lizard suits traders willing to own the stock who want a higher credit and lower breakeven.

Jade lizard vs short strangle: which is better?

A short strangle collects more credit but has unlimited upside risk and requires more margin. A jade lizard gives up part of the credit to buy the call wing, which removes the upside risk completely if the credit still exceeds the spread width. For most traders the jade lizard is the more conservative choice on the upside with identical exposure on the downside.

What happens if the stock falls below the short put in a jade lizard?

The short put goes in the money and the position loses $100 per dollar below the breakeven, which is the put strike minus the credit. At expiration you can be assigned 100 shares at the put strike. The calls expire worthless and the credit reduces your effective purchase price to $89.90 in the example.