A jade lizard is a short OTM call spread paired with an OTM naked put.
The aim of a jade lizard is to collect enough premium to offset the width of the call spread, thereby eliminating upside risk.
For example, a jade lizard in XYZ might be established by selling the $10 put as well as the $14/15 call vertical spread. Because the call vertical spread is $1 wide, this trade would need to collect at least $1 in total premium in order to eliminate that upside risk. This leaves only downside risk, making it a bullish trade.
Jade lizards should not be done in stocks you are unwilling to own, as you may be assigned long stock if the short put goes ITM, thereby creating undefined downside risk.
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