Reverse Jade Lizard option strategy
Reverse Jade Lizard combines a short OTM Call with a short OTM Put spread. It is the neutral to mildly bearish twin of the Jade Lizard, and when the total credit is at least the width of the put spread it carries no risk on the downside.
Payoff at expiry
Nifty, lot size 65 · Nifty future 22,650 · 6 Oct 2026Legs
| Action | Option | Strike | Lots | Qty | Premium |
|---|---|---|---|---|---|
| SELL | OTM Call | 22,700 | 1 | 65 | ₹112.10 |
| SELL | OTM Put | 22,600 | 1 | 65 | ₹111.98 |
| BUY | OTM Put | 22,550 | 1 | 65 | ₹91.20 |
How it works
- Sell 1 OTM call at the 22,700 strike for ₹112.10, collecting the premium.
- Sell 1 OTM put at the 22,600 strike for ₹111.98, collecting the premium.
- Buy 1 OTM put at the 22,550 strike for ₹91.20, paying the premium.
- You receive a net ₹8,637 upfront for the position. This is the most you can make.
Below 22,833 you profit, up to ₹8,637.
Above 22,833 you lose, and the loss keeps growing as Nifty rises.
Set-up: Sell 1 lot OTM Call, Sell 1 lot OTM Put and Buy 1 lot further OTM Put with same expiration date.
What happens if Nifty moves
Profit or loss at expiry| Nifty at expiry | Move | Profit / loss |
|---|---|---|
| 21,300 | −6% | +₹5,387 |
| 21,950 | −3% | +₹5,387 |
| 22,400 | −1% | +₹5,387 |
| 22,650 | Unchanged | +₹8,637 |
| 22,900 | +1% | −₹4,363 |
| 23,350 | +3% | −₹33,613 |
| 24,000 | +6% | −₹75,863 |
How the Greeks affect it
When to use
When you expect the underlying to stay range bound or drift lower and implied volatility is high.
- Collects premium from both sides.
- Downside risk is capped and can be removed entirely.
- Benefits from time decay and falling volatility.
Things to watch
- Upside risk above the call strike is uncapped.
- Requires margin.
- A sharp rally leads to heavy losses.
Reverse Jade Lizard: questions
What is a Reverse Jade Lizard strategy?
Reverse Jade Lizard combines a short OTM Call with a short OTM Put spread. It is the neutral to mildly bearish twin of the Jade Lizard, and when the total credit is at least the width of the put spread it carries no risk on the downside.
When should you use a Reverse Jade Lizard?
When you expect the underlying to stay range bound or drift lower and implied volatility is high.
How do you set up a Reverse Jade Lizard?
Sell 1 lot OTM Call, Sell 1 lot OTM Put and Buy 1 lot further OTM Put with same expiration date.
What is the maximum profit of a Reverse Jade Lizard?
Limited to the net credit received, if the underlying stays between the short put and the call strike at expiry.
What is the maximum loss of a Reverse Jade Lizard?
Unlimited above the call strike, as the short call loses with every rise. On the downside the loss is capped at the put spread width less the credit, and is nil if the credit exceeds the width.
What is the breakeven of a Reverse Jade Lizard?
With Nifty at 22,650, the example on this page breaks even at 22,833 at expiry.