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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.
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.
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