Jade lizard
A jade lizard combines a short put with a short call spread. Its defining rule is that the total premium collected must be at least as large as the width of the call spread, so even if NIFTY rallies far above the call strikes, the trade shows no loss at expiry. The risk sits entirely on the downside, in the short put. This version trades NIFTY monthly options about two weeks before expiry.How it trades
Results
PRE-BUILT · DEFAULTSWhere it made and lost money
With only five trades, all of them winners, no condition has enough trades to judge. The evidence is consistent with the structure: two trades held while NIFTY rose more than 1% made ₹10,637 together, two held while it stayed within 1% made ₹6,922, and the single trade held through a fall of more than 1% still made ₹4,407. A rally is covered by the credit and the call spread; a mild fall is absorbed by the 20-delta put's distance. None of the five met a sharp sell-off, which is where a naked short put would be tested.
About this strategy
- Wait for the first session when the NIFTY monthly expiry (the last Tuesday of the month) is 14 calendar days away or less, and enter at 09:30.
- Sell the put with a delta closest to 0.20 and the call with a delta closest to 0.30.
- Buy a call above the short call at the narrowest width between 100 and 300 points for which the total credit is at least that width. If no width qualifies, skip the month.
- Take profit when 50% of the credit has been captured.
- Stop out if the loss reaches twice the credit. Both exits fill at market, including after overnight gaps.
- Otherwise close at 15:15 two calendar days before expiry. One lizard per monthly series.
Why traders use it
Many option sellers are mildly bullish and want to collect premium without worrying about a sudden rally. A short put alone earns well when the market drifts up or sideways, and adding a call spread lifts the credit. Making the credit at least the call spread's width removes upside risk at expiry, leaving a single, well-understood risk below the short put. With a 50% profit target, trades are often closed within a week, freeing margin before expiry week.
The year in plain words
On NIFTY from 1 Oct 2025 to 30 Sep 2026 with default settings, the jade lizard traded in only five of twelve months, from March onwards; in the other months the rules found no qualifying setup. All five trades reached the 50% profit target, typically after about six days, for ₹21,967 before costs and ₹20,418 after ₹20 per order and bid-ask slippage. The best trade made ₹6,133 and the smallest ₹3,432, and there was no drawdown. A perfect record over five trades says little: the stop at twice the credit was never tested, and the downside risk of the short put did not show up in this period.
What the settings do
Risks
- The short put is uncovered, so a sharp fall can produce a loss far larger than the credit, especially through an overnight gap.
- The 'no upside risk' feature holds only at expiry; a fast rally before then still shows a mark-to-market loss on the call spread.
- Five trades in a year are too few to judge the strategy, and the stop was never triggered in this test.
- Selling a naked put on NIFTY monthly options needs full option-selling margin.
Who it suits
Option sellers with a mildly bullish view, full margin for a naked NIFTY put and comfort holding positions overnight for a week or more. It suits traders who understand the downside tail risk and size for it.
Questions traders ask
What is a jade lizard option strategy?
It is a short put combined with a short call spread, where the total premium received is at least the call spread's width. That makes the upside risk zero at expiry, because the credit covers the worst loss on the call spread. All of the risk is below the short put.
Is the jade lizard profitable on NIFTY?
In this backtest from 1 Oct 2025 to 30 Sep 2026 it made ₹21,967 before costs and ₹20,418 after ₹20 per order and bid-ask slippage, with all five trades winning. Statutory charges were excluded. Five trades is far too small a sample, and past results do not guarantee future ones.
Why does the jade lizard have no upside risk?
If NIFTY finishes above both call strikes, the call spread loses its full width. Because the rules only open the trade when the total credit is at least that width, the credit pays for that loss, and the short put expires worthless. Before expiry, though, a rally can still show a temporary loss.
Why did it trade only five times in the year?
The trade needs a call spread between 100 and 300 points wide for which the combined premium covers the width. When call premiums are low relative to the strike gaps, no width qualifies and the month is skipped. In this period that happened in the first five months.