Educational only, not financial advice or a strategy recommendation. Options strategies carry risk, including of substantial loss. NoVo trades long single 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 differs
NoVo buys defined-risk long options, not multi-leg premium structures like the jade lizard. It’s a clever tool for advanced premium sellers who want no upside risk — understand it, but it’s a different, undefined-downside-risk game from NoVo’s.