Jade Lizard and Reverse Jade Lizard

A jade lizard blends a short put with a bear call spread. You collect premium from both pieces. When structured so call-spread width exceeds the call credit, upside risk is defined (no naked short call exposure above the long call wing). Traders often use it for neutral-to-bullish outlooks similar to a bull put spread but with extra call-side premium.

The reverse jade lizard flips the bias (short call + bull put spread) for the opposite directional tilt.

Jade lizards are popular in education because they package two credit ideas into one ticket. They are not "free trades." You still face put downside and call-side caps. Map all three legs on one payoff chart before entry so you see combined breakevens, not just put credit in isolation.

Structure (classic jade lizard)

Component	Legs
Short put	Sell OTM or ATM put
Bear call spread	Sell lower call, buy higher call

• Entry: Net credit (put premium + call spread credit).
• Downside: Put side loss if stock collapses (like bull put risk).
• Upside: Defined if long call wing caps the short call; verify width vs credit.

Worked example

Stock at $100.

1. Sell $95 put for $2.00.
2. Bear call spread: sell $105 call $1.50, buy $110 call $0.60 → credit $0.90.
3. Total credit ≈ $2.90 ($290).

If call spread width is $5 and call credit $0.90, upside max loss on call package is about $4.10 per share if stock rips above $110. Downside: put losses below $95 minus credit (similar to bull put math).

If stock finishes at $102, put expires OTM, calls may expire OTM: keep full credit.

Payoff at expiration (qualitative)

Stock	Typical result
$90	Put side losses dominate
$100	Near max credit retention
$108	Call spread may eat some credit
$115	Call wing near max loss; put OTM

Greeks for this position

• Delta: Generally positive (bullish/neutral). Short put adds negative delta; short call spread subtracts positive delta on rallies.
• Theta: Positive (net short premium). Theta explained.
• Vega: Negative (short vol overall).
• Gamma: Negative near short put and short call strikes into expiry.

When traders consider it

Outlook	Jade lizard vs alternatives
Bullish, want credit	Bull put spread (simpler)
Bullish, extra premium, capped upside	Jade lizard
Bearish mirror	Reverse jade (short call + bull put spread)

Risks and management

• Put assignment on selloffs.
• Structure math: If call credit exceeds spread width, upside may still have naked call risk. Always check strikes and fills.
• Gap risk on either side.
• Three legs of commissions.

Reverse jade lizard (sketch)

Short OTM call plus bull put spread (long higher put, short lower put) tilts bearish/neutral with defined risk on the downside of the put spread if structured correctly. Always verify net credit and wing widths like the classic version.

When jade beats bull put alone

Extra call-side premium can improve total credit if you accept capped upside on a rally. If you want full upside, use bull put only. If you fear a melt-up through call strikes, narrow the call spread or skip the jade.

Common mistakes

• Building jade without checking call spread width vs credit (upside leak).
• Oversizing because credit looks "larger" than a single credit spread.
• Ignoring put-side gap risk identical to bull put spreads.

Liquidity and execution

Execute as a single strategy order when possible. If legged, fill the defined-risk call spread before or together with the short put so you are not naked on the call side. Compare total credit to a simple bull put at your short put strike to see if the extra call complexity is worth the dollars.

Closing vs holding to expiration

Jade lizards are usually managed as a unit: close all three legs when combined profit hits a target or when either side is threatened. Letting the put side go deep ITM while hoping the call side saves the trade is not a coherent plan. Verify on entry that upside is truly capped by call spread width versus credit.

Mark-to-market before expiration

Jade lizards blend put-side and call-side marks. Selloffs hurt the short put portion; rallies test the call spread cap. Open profit often looks best when spot sits between the short put and short call zone. IV changes move both sides; a vol spike can hurt even if price is quiet.

Compare open Greeks in the builder to a standalone bull put at the same put strike to see what the call spread adds or subtracts.

Tax and reporting (high level)

Three legs may report separately. Not tax advice.

Practice without capital

Build the jade in ThetaViz and separately build its bull put and bear call components. Compare total credit and combined breakevens. If the jade does not improve risk/reward versus the simpler bull put, you have learned something without paying tuition to the market. Saved strategies and P/L.

Related guides

Leg breakdown: bull put spread plus bear call spread. Credit framing: credit vs debit spreads. Risk: options risk disclosure.

Reading the payoff chart

A jade lizard payoff combines put-side loss below the short put with a capped call-side loss above the call spread. Confirm the chart shows no unlimited upside loss if you structured for a true jade. Reading payoff charts helps validate combined multi-leg shapes. Re-check upside cap after every fill change; jade structures are unforgiving if call width and credit math are wrong.

Try in ThetaViz

Open jade lizard builder and compare payoff with separate bull put and bear call templates.

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ThetaViz provides educational tools only. This guide is not investment, tax, or legal advice. Prices, margin requirements, and tax rules change. Confirm details with your broker and qualified professionals before trading.