Strota / Jade Lizard — Sell Premium Without Upside Risk

Jade Lizard — Sell Premium Without Upside Risk

Short OTM put + short OTM call + long further-OTM call. Net credit > spread width on the call side = no upside risk.

Jade lizard = short OTM put + short OTM call + long further-OTM call. Configured so the net credit exceeds the call-side spread width, eliminating upside risk entirely.

Only downside risk on the put side. Most profitable when the underlying stays in range, but you can never lose on a sharp rally — a unique property among premium-selling strategies.

Worked NIFTY jade lizard

NIFTY at 22,000. Sell 22,200 CE at ₹50 + Buy 22,300 CE at ₹25 (call credit spread = ₹25). Sell 21,700 PE at ₹35 (naked short put).

Total credit = 50 - 25 + 35 = ₹60 × 25 = ₹1,500 per lot.

Call-side spread width = 100 points = ₹2,500. Credit ₹1,500. Spread width > credit means upside loss possible — NOT a jade lizard yet.

Adjust: Sell 22,200 CE at ₹50 + Buy 22,250 CE at ₹35 (call credit spread = ₹15). Sell 21,700 PE at ₹35. Total credit = 15 + 35 = ₹50 × 25 = ₹1,250 per lot. Call-side spread = 50 points = ₹1,250. Credit ≥ spread width = NO upside risk.

Downside: put can be assigned if NIFTY falls below 21,700. Max put loss = (21,700 - 0) × 25 - put premium received. Unlimited theoretically, manage with stops.

When jade lizard works

Bullish-to-neutral outlook. Tolerates upside (no loss above the call spread) while collecting premium.

Stocks you'd be OK owning at the put strike. If assigned on the put, you take the stock at a level you're comfortable with.

Lower IV. The downside put is the income source; you want it priced reasonably (not bloated by event premium).

Adjustment when the put is challenged

If NIFTY drops toward the put strike, you can roll the put down and out — close current put, sell a lower-strike put on a later expiry for credit. This 'defends' the position while keeping the no-upside-risk property of the call side.

Rolling indefinitely is risky in a sustained downtrend. After 2-3 rolls, consider closing the position entirely.

What to do with this: Pair jade lizards with specific stocks you'd own at the put strike. If you sell a 21,700 PE on NIFTY and your account can't comfortably take a NIFTY-correlated drawdown to that level, don't open the trade — even with no upside risk, the downside is real.

Common misreads

Forgetting to verify net credit ≥ call spread width. Without that condition, it's not a jade lizard — it's just a strangle-like structure with normal upside risk.
Treating the put as 'safe' just because the call side is protected. The put has real downside risk that must be managed.
Confusing jade lizard with iron condor. Condor has wings on BOTH sides; jade lizard only has the upside wing.

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Key takeaways

Short OTM put + short OTM call + long further-OTM call.
Net credit ≥ call-side spread width = no upside risk.
Only downside risk (from the short put).
Best for bullish-to-neutral outlook on stocks you'd own.
Unusual strategy — uncommon but elegant when it fits.

Jade lizard — niche strategy questions

What's the maximum profit?

If both the put and the call expire OTM (underlying stays between the short put and short call), you keep the full credit. That's the max profit.

What's the maximum loss?

On the downside, theoretically unlimited (down to zero on the underlying). On the upside, zero (the no-upside-risk property). Position management focuses entirely on the put side.

When does jade lizard make sense over iron condor?

When you're willing to take downside risk (you'd own the underlying at the put strike) but want to eliminate upside risk completely. Condor is symmetric; jade lizard is asymmetric in your favour.

Margin requirement?

Span + exposure: similar to a strangle, typically ₹70,000-1,20,000 per lot on NIFTY. The naked short put dominates the margin requirement.

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