What is a Jade Lizard Strategy? | Options Trading Concepts

[@tastyliveshow]

**at **6:30** - cost basis is 78.97, not 98.97**

[@scientificapproach6578]

This strategy is at its best if you are trading a product with IV skewed to the down side. This strategy: Sell an OTM put with high IV skew Hedge by selling an ATM call with higher IV Hedge the short call by buying a low IV Call This works great on indexes since they often have have a IV skew to the down side, example XPS and SPX

[@binaysharma7144]

Wonderful Strategy & even Wonderfully explained !!

[@benjammin105123]

I'm thinking of it as a strangle with some upside protection a dollar away.

[@vnymachado]

What is the advantage here over a short strangle? They are very similar...

[@russzee]

I am curious to learn what would prompt someone to choose a Jade Lizard over a Wide Put Broken Wing Butterfly? A Put BWB will also yield a credit and provide no risk to the upside. Additionally, this strategy requires lower capital than a Jade Lizard, and also provides the opportunity to collect maximum credit if the underlying closes at the peak strike price at expiration. IMO, the only reason to choose a Jade Lizard over a PBWB is if I want to own the stock in the event the trade expires ITM on the Put side - which then begs the question if a Covered Call is probably a better choice than a Jade Lizard.

[@tastyliveshow]

They are just similar directional trades with different micro-tradeoffs. It's all about your assumption and what you want to achieve with the trade.

[@theowenssailingdiary5239]

Where was the upside risk with the short put anyway?

[@Saahib_K]

So basically a 3 leg strategy with no cover on selling the naked put, that lizard can bite you with an unlimited loss venom, should the underlying tank on you.

[@shihaowei119]

iron condor without long put leg

[@investinglearningmachine3951]

Minus premium you received 🌚🌚

[@roopinderpalsinghrandhawa9846]

UNLIMITED loss means 0. Who in their right mind will put their money on a shady stock?

[@86753091974]

same would happen to you if you were long any stock

[@TradingEducation911]

@@86753091974 except with long stock, you have so much potential for upside, where you are getting $1 profit only.....

[@retailalgotrader6016]

solid explanation Mike

[@giovannisilano]

Why dont u just sell a cash covered put than? For that 0.35 more? That u gain from calls?

[@Rich-ey7jv]

Yeah, I don't get it. Played with it on Optionstrat. Seems like a waist of time. Moves your downside one percent, but lose more from the upside.

[@zerototalenergy150]

exzcellent thank you !!!!!! what are the cons of jade lizard versus naked put ??

[@ronsexton3685]

Do you try for expiring with profit or 50% of the possible profit or ....what?

[@tastyliveshow]

We typically close at 50% max profit for jade lizards.

[@buggin33]

In order to execute the trade through tasty works do I need a cash account value to cover the risk? Using cash not margin. Not sure if this is viable for smaller accounts

[@tastyliveshow]

This strategy can be executed in IRA or margin accounts at tastyworks. IRA accounts would be cash secured, so less leverage there, but margin accounts would offer buying power relief.

[@buggin33]

tastytrade the margin required would be 20-40% of the position? Or what is the required amount of cash available

[@buggin33]

tastytrade thank you btw

[@edmandell3064]

Dumb question. But I don't think I can sell a naked put on Robinhood? Do I have to do a cash secured put or put credit spread to create the first leg on Robin hood?

[@tastyliveshow]

Not too sure unfortunately - I would check your account to see if margined puts are allowed - otherwise spreads are the next best thing vs cash secured - cash secured takes too much capital and assumes the stock will go to zero which is a low probability event. Up to you though!

[@mbrewer918ify]

What would be the average time to hold this option strategy. 1 week 2 weeks 1 month?

[@habibbialikafe339]

i dont get your point about reducing your cost basis. i get if you do this and receive 1.03, its like you got the stock a little cheaper, but you were talking about 98.97. maybe you mispoke...

[@86753091974]

i heard him say $78.97 which is his SHORT PUT $80 - $1.03 = $78.97 cost basis or getting a $1.03 discount per share.

[@YoursTruelyMe2]

Interesting strategy Its a short strangle (short OTM call and short OTM put

[@Jacob-ry3lu]

I thought that a short strangle was selling a put and call at the same strike price. The two short strikes here are different strike prices

[@georgecarr68]

Undefined risk can be extremely dangerous, in this case to the downside. Imagine had you sold this strategy on FB before that $80 drop! I learned this lesson in a horrible way years ago following Tasty Trade's recommended Naked strategy. Make a long story short it involved Solar City and me selling a Naked Call just trying to make 50% profit of $80. I ended up loosing -2,300 over night with Elon Musk's purchase! It's best to define your risk!!!

[@simontse4088]

What's the advantage of this over the Iron Condor Stretegy? The only thing that comes to mind is that it collects a bit more Premium than the Condor, but it would require more Margin capital since the short put is naked.

[@tastyliveshow]

You have no risk to one side - that is the biggest difference and potentially the biggest advantage, where a jade lizard would be a winner on a big rally and an iron condor would not be.

[@amolkulkarni2425]

How to do middle adjustment in case of but movement

[@tastyliveshow]

Can you rephrase or send an example to [e-mail]?

[@amolkulkarni2425]

@@tastyliveshow sorry for typo mistake. I mean big movement. Say stock price reach 80 over a night.

[@joesemo]

That ties up a lot of Margin. Probably only if you want to own the shares. Not for beginners.

[@peterschiffer3582]

Isn't that the same as a Back Spread ?

[@tastyliveshow]

This is a strangle with a defined risk call option - front ratio is buying one and selling two further OTM of the same option type.

[@scasinger123]

You kids are so cute. I've been doing this for decades, but I call it a 3-legged dog.

[@maskof]

I got bitten by a jade lizard once. Once.

[@86753091974]

just wondering how and what happened, thx

[@Maggarooni]

This is just an iron condor without the tail hedge. Why would you ever go naked? Just go buy a 5 delta put for .10 and be able to sleep at night. This is a trade where one bad trade wipes out the last 10 good ones.

[@FriskyDingo1983]

Not if you don't mind owning the stock

[@soli9573]

This guy is literally speaking Chinese my wife says. She knows nothing about the stock market. LOL

[@mbrewer918ify]

No put protection, sounds like no sleep for a while.

[@gilroberts1863]

It is a Cash Secured Put (typically) so you would end up with the stock at worst I guess.

[@Arashmidos2012]

Could you bring some well spoken people onboard for your videos ? Good material, subpar execution.

[@zalmal5220]

So confusing!