Jade Lizard Risks

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The Jade lizard trade involves a short call vertical, and a naked put married is one trade on the think or swim platform. Many people will try to get a credit equal as close as possible to the spread of the call vertical, so the risk to the upside is zero, or nearly zero. The naked put side risk is relatively low, anyway, given certain criteria.

What is the criteria? One, you can take the stock, then sell calls against it until it is called away from you. Or, you can just roll the put until the stock comes back up to a level above the put price.

If you plan on rolling the put or taking the stock, I’d make sure it is a stock you can tolerate owning, maybe a $AAPL type stock with a good track record.

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