Reverse Jade Lizard

It's the mirror image of the jade lizard. Jade lizard = short put + short call spread (no upside risk). Reverse jade lizard = short call + short put spread (no downside risk). They're opposite in their risk-free sides and directional biases.

No, it's generally considered RISKIER. While a jade lizard's downside risk is limited (stock can only go to zero), the reverse jade lizard's upside risk is UNLIMITED (stock can rise infinitely). This fundamental asymmetry makes the reverse jade lizard more dangerous.

You have options: 1) Accept small downside risk (often acceptable), 2) Narrow the put spread width, 3) Use higher delta options for more premium, 4) Choose different underlying with better premium, 5) Wait for higher IV environment. Focus more on the short call - that's your unlimited risk.

This is the nightmare scenario. Your stop loss can't protect you from gaps. If stock gaps 5% up overnight, you suffer the full loss from your short call strike to the gap level. This is why position sizing and avoiding events is critical.

You can, but be very careful. If assigned on the short call, you'd be short stock (a complex, risky position). Most traders prefer using reverse jade lizards on indices like STI (cash settled) to avoid short stock complications.

Breakeven = Short call strike + Total credit received. For example, if short call is at 3200 and credit is 28 points (S$140), breakeven = 3200 + 28 = 3228. Stock must stay below 3228 to profit.

Act immediately - don't wait. Options: 1) Close entire position immediately (preferred), 2) Roll call up and out if you can get credit, 3) DO NOT hope for reversal. With unlimited risk, hesitation is costly. The 'no downside risk' is irrelevant when you're losing on the call side.

NO. Never hold through earnings. A positive earnings surprise can gap stock 10%+ overnight, causing massive losses that no stop loss can prevent. Always close before earnings regardless of current P&L.

Margin is primarily based on the short call (like naked call margin) since that's the unlimited risk portion. The put spread has defined risk and adds minimally. Total margin can be substantial because of the naked call component.

Use reverse jade lizard when: 1) You want extra credit from put spread, 2) You're confident stock won't crash (so no downside risk is valuable), 3) Willing to manage three legs. Use bear call spread when: 1) Want simplicity, 2) Want defined risk on both sides, 3) Less confident in direction.

Put skew (OTM puts having higher IV) means you collect more premium on the put spread side. However, since calls typically have lower IV, the call premium is relatively lower. This can make achieving no downside risk harder than with jade lizards, where the skew helps the put side credit exceed the call spread cost.

Conservative: Call 0.20, Put 0.15. Standard: Call 0.25, Put 0.20. The key is the call delta - keep it conservative because that's your unlimited risk. Put delta matters less if you achieve no downside risk. Balance based on how confident you are in resistance holding.

Gamma becomes your enemy if stock rallies. As price rises toward short call, gamma accelerates your delta, making losses compound faster. Management: 1) Close at 21 DTE before gamma spikes, 2) Have strict stop at short call strike, 3) Size very conservatively for gamma-accelerated scenarios.

Yes. Examples: 1) Reverse jade lizard + long call = defined risk both sides (like iron condor but asymmetric), 2) Multiple reverse jade lizards at staggered strikes (complex), 3) Reverse jade lizard with delta hedge for neutral exposure. Most commonly, stick to single reverse jade lizard with strict management.

Plan for a 10-15% overnight gap up. Calculate: loss = (Gap price - Breakeven) × multiplier. If this loss would devastate your account, reduce position size. Example: With breakeven at 3228, a gap to 3450 = (3450-3228) × S$5 = S$1,110 loss per contract. Can your account handle this?