Most 3-leg strategies are trade-offs. The Jade Lizard is different — it actually eliminates one side of risk entirely. By combining a short put, a short call, and a long call wing (structured so total credit exceeds the call spread width), you create a position with zero upside risk and only bounded downside. This is the quiet favorite of professional premium sellers in Indian markets.
What You Will Learn
1. The 3-Leg Structure
The three legs
SELL short put (OTM, collects premium — bearish on big drops only)
SELL short call (OTM, collects premium — capped upside)
BUY long call (further OTM — caps upside loss)
CRITICAL RULE: Total credit > (long call strike - short call strike).
2. Live RELIND Setup — spot ₹1,310, 30 DTE
RELIND · IV 22% · Lot 500
SELL 1,260 PE + SELL 1,360 CE + BUY 1,380 CE
Short put (1,260 PE)Credit +₹28 × 500 = +₹14,000
Short call (1,360 CE)Credit +₹18 × 500 = +₹9,000
Long call (1,380 CE)Debit -₹10 × 500 = -₹5,000
Net credit+₹18,000
Call spread width1,380 - 1,360 = 20 points × 500 = ₹10,000
Credit (₹18,000) > Call spread width (₹10,000)?YES ✓
→ Upside max loss₹0 (covered by net credit)
Max profit (range >1,260 and ≤1,360)+₹18,000
Max profit (RELIND above 1,380)+₹8,000 (credit - call spread loss)
Max loss (RELIND to 0)1,260 × 500 - 18,000 = ₹6,12,000
3. The Math — Why Upside Risk Is Zero
Consider RELIND at ₹1,500 (far above short call):
- Short 1,360 CE loses: (1,500 - 1,360) × 500 = ₹70,000
- Long 1,380 CE gains: (1,500 - 1,380) × 500 = ₹60,000
- Call spread net loss: ₹10,000
- Net credit collected: ₹18,000
- Net upside P&L: +₹18,000 - ₹10,000 = +₹8,000 profit
Even an explosive rally leaves you profitable, because your initial credit exceeds the spread risk.
4. When to Use
Ideal: Mildly bullish view. High IV. Stock you'd accept owning if assigned on the put side. Elevated call-side IV helps credit.
Avoid: Low IV environments (not enough credit to cover call spread). Volatile or rapidly dropping stocks.
Build a Jade Lizard in Strategy Lab
Custom strategies supported — 3-leg, 4-leg, any structure.
Open Strategy Lab →Frequently Asked Questions
What is a Jade Lizard?
A Jade Lizard is a 3-leg neutral-to-bullish options strategy: sell a short put, sell a short call, and buy a longer-strike call (wing). The key construction: total credit collected must exceed the width between the short call and long call. Result: zero risk on the upside, limited risk only on the downside.
Why is there no upside risk?
Because the short call spread (short call + long call wing) max loss equals the strike difference. If you collect more premium than that difference, the net credit covers any upside loss. Example: 100-point call spread, collect ₹120 total credit (₹60 from call spread + ₹60 from short put) — upside max loss of ₹100 is fully covered.
Where is the risk?
All the risk is on the downside, from the short put. If the stock drops below the short put strike, you face assignment or unrealized loss on the put. Max downside loss = Strike of short put - Total credit received. For a RELIND 1,300 short put with ₹120 total credit: max loss = ₹1,180 per share.
When should I use it?
When you're mildly bullish or neutral-to-bullish, and the stock has elevated call-side IV (often from recent rally). The structure lets you collect premium while eliminating upside risk. Good for stocks you'd be OK owning if assigned (RELIND, TCS, INFY — blue-chips you wouldn't mind buying cheaper).
What's the typical risk-reward?
A Jade Lizard on RELIND at 1,310 might collect ₹120 total credit with ₹1,180 max downside. Reward:Risk looks poor at first glance (1:10), but probability of profit is ~70-80% because only a significant drop triggers loss. Expected value can be strongly positive despite the lopsided ratio.
How does it differ from a Short Strangle?
Short Strangle has undefined risk on BOTH sides. Jade Lizard has ZERO upside risk by adding a long call wing. You give up some premium (you paid for the wing) but sleep better. Jade Lizard is the defined-upside-risk version of a strangle for traders who can't stomach unlimited upside risk.