Snapshot
Legs
Sell 1 OTM Put + Sell 1 OTM Call + Buy 1 Higher-Strike Call
Outlook
Neutral to Mildly Bullish
Max profit
Total net credit received
Max Loss
Short put strike minus total net credit received (Substantial)
A jade lizard option strategy combines selling an out-of-the-money put option with selling an out-of-the-money call spread (selling a lower call and buying a higher call). The key rule is collecting a total net credit that exceeds the width of the call spread. Traders use this strategy to generate income when neutral to slightly bullish.
Because the total credit received is greater than the call spread width, there is zero upside risk if the stock surges. Maximum profit is the total credit collected if the stock closes between the short put and short call. Downside risk remains substantial if the stock crashes below the short put strike price.
Example
Stock
$100
Trade
- Sell $90 Put for $4.00
- Sell $105 Call for $2.50
- Buy $110 Call for $0.50
→ $6.00 credit ($600)
Breakeven
$84.00 (Downside only)
Outcomes
- Stock between $90 and $105: +$600 Max Profit
- Stock ≥ $110: +$100 Profit (No Upside Risk)
- Stock < $84: Loss Zone (e.g., -$400 at $80)