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Jade lizard

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Jade lizard

In options trading, a jade lizard is a custom option strategy which consists of a bull vertical spread created using call options, with the addition of a put option sold at a strike price lower than the strike prices of the call spread. For one underlying security, same expiration date, this strategy consists of buying a call option at one strike price, selling another call option at a higher strike price, then selling a put option at a strike price lower than that of both call options. The addition of the sale of a put option is consistent with the expected move of the underlying and results in additional premium collected.

Twisted sister

A jade lizard may be created in reverse, in which case it is known as a twisted sister. The construction of a twisted sister consists of a bear vertical spread created with put options, along with the sale of a call option. For one underlying security, a put option is sold at one strike price, and another put option is bought at a higher strike price, then a call option is sold at a strike price higher than that of both put options. The addition of the sale of a call option is consistent with the expected move of the underlying and results in additional premium collected.


References

McMillan, Lawrence G. (2002). Options as a Strategic Investment (4th ed. ed.) New York: New York Institute of Finance. ISBN 0-7352-0197-8.[not in citation given]

This article uses content originally from a deleted or an article undergoing deletion on Wikipedia. The original article was written by the following Wikipedia user(s): FreeRangeFrog. The text of Wikipedia, like Speedy Deletion Wiki, is available under the Creative Commons Attribution-Share Alike 3.0 Unported and GNU Free Documentation License 1.2 licenses.


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