Jade Lizard

The name comes from the tastytrade network who popularized the strategy. The etymology isn't deeply meaningful - it's just a catchy name for a strategy combining a short put with a short call spread where the credit exceeds the call spread width, creating no upside risk.

If credit < call spread width, you still have upside risk. For example, £40 credit with £50 spread = £10 upside risk if underlying rallies far enough. This is technically not a 'true' jade lizard but may still be a valid trade if you accept that small upside risk.

Neither is 'better' - they serve different purposes. Jade lizard eliminates upside risk but has unlimited downside (like short put). Iron condor has defined risk on both sides. Choose jade lizard if you're bullish-biased and want zero upside risk. Choose iron condor if you want defined risk everywhere.

If the underlying stays between your put strike and short call strike, all options expire worthless and you keep your entire credit. This is the maximum profit scenario and a great outcome for the jade lizard.

For American-style equity options, early assignment is possible on ITM puts, especially before dividends. For index options (like FTSE 100), they're typically European-style (exercise only at expiration) and cash-settled, so no physical assignment occurs.

Size it like a cash-secured put. Ask: 'What would my loss be if underlying dropped 10-15%?' That notional risk should be 3-5% of your portfolio. Don't oversize just because there's 'no upside risk' - the downside is very real.

Not necessarily. A larger buffer means better worst-case upside outcome, but it often requires trade-offs: closer put strike (more assignment risk) or tighter call spread (less premium). A 10-20% buffer (e.g., £55 credit on £50 spread) is typically sufficient.

30-45 DTE is ideal. Shorter durations have faster theta but less premium to achieve credit > width. Longer durations have more premium but tie up margin longer. 30-45 days balances premium collection with manageable time exposure.

Buy back all three legs (buy the put, buy the short call, sell the long call). If the position is profitable, you'll pay less than the credit you received. Set a GTC order at your profit target immediately after entry.

IV spike hurts (negative vega position). Assess: Is underlying still in profit zone? Is IV spike temporary or fundamental? If underlying is cooperating and IV spike is temporary, holding through is often fine. If IV spike signals potential underlying move, consider closing.

Put skew elevates OTM put IV relative to OTM call IV. Exploit this by recognizing that your put premium 'subsidizes' the call spread. You can often use a narrower call spread than expected because the put contributes disproportionately to total credit.

Convert when: (1) You want to cap downside risk that's become concerning, (2) IV has spiked making the long put cheap, (3) Position is profitable and you want to lock it in with defined risk. Buy a put below your short put to create the fourth leg.

Jade lizards add positive delta (bullish bias) and eliminate upside tail risk. Use them to complement iron condors (neutral) and other premium strategies. They work well when you want income but are concerned about upside gaps. Track aggregate delta and short put notional across portfolio.

If call spread is at max loss (underlying well above long call), consider closing the call spread to realize the fixed loss. You're then left with just a short put, which has maximum theta at that point. Continue managing the put side independently. This simplifies the position.

Multiple jade lizards on correlated underlyings (e.g., UK stocks during market stress) means correlated short put risk. A market decline hits all put sides simultaneously. Diversify across uncorrelated underlyings and set portfolio-level limits on short put notional exposure.