Educational only, not financial advice or a strategy recommendation. Options strategies carry risk, including of substantial loss. NoVo’s read is built around directional long options; the strategies here are explained for understanding, not endorsed.
A jade lizard combines a short put and a short call spread so that the total premium collected exceeds the call spread’s width — eliminating upside risk. It’s an advanced, neutral-to-bullish premium structure.
How it works
You sell an OTM put and an OTM call spread (short call + long further call). If the total credit collected is greater than the width of the call spread, then even if SPY rips through the calls, the max call-side loss is fully covered by the premium, so there’s no upside risk. The only real risk is to the downside (from the short put).
The appeal and the catch
The appeal: you profit in a range, mildly up, or even a big rally (no upside risk), collecting decay. The catch: it’s still undefined-risk to the downside (the naked short put), so a sharp drop hurts, with assignment risk. It’s clever but not risk-free — the risk just all lives on one side.
A jade lizard trades away upside risk entirely — but all the risk it “removed” from the top just concentrates at the bottom, in a naked short put.
How NoVo’s focus differs
NoVo’s read is built around defined-risk long options, not multi-leg premium structures like the jade lizard. The lizard is a clever tool for advanced premium sellers who want no upside risk — understand it, but its undefined downside makes it a very different game from defined-risk long options.