0DTE Jade Lizard

Whether you're new to zero-days-to-expiration or scaling an existing approach, understanding the fundamentals of zero days to expiration trading is essential before you trade live capital. This guide covers The 0DTE Jade Lizard is a creative options strategy designed to maximize premium collection while completely eliminating risk on one side of the market. It is a favorite among traders who have a neutral-to-bullish bias.

What Is a Jade Lizard?

A Jade Lizard is a slightly skewed, three-leg options strategy. It is created by combining a short out-of-the-money (OTM) put with an OTM short call spread (a bear call spread). The goal is to collect enough premium so that if the underlying asset rallies aggressively, you have absolutely zero upside risk.

Setup: Short Put + Short Call Spread

To execute a 0DTE Jade Lizard:

1. Sell an OTM put below the current price. (Note: this is a naked put, which requires margin).
2. Sell an OTM call above the current price.
3. Buy a further OTM call to define your risk on the upside.

This strategy effectively creates a credit spread on the call side, funded heavily by the naked put on the downside.

Why There's No Upside Risk

The magic of the Jade Lizard lies in the math. You must structure the trade so that the total net credit received is strictly greater than the width of the call spread. Because your maximum loss on the call spread is the width minus the credit received, receiving more credit than the width means a massive upside rally will still result in a net profit.

Managing Downside Risk

Because the put side of the trade is naked (undefined risk), your entire risk management focus must be on the downside. If the market aggressively sells off, the short put will lose value rapidly. You must have a strict stop-loss in place for the short put leg to prevent catastrophic losses.

When to Use Jade Lizard vs Iron Condor

You should use a Jade Lizard when implied volatility skew is heavy on the put side (puts are much more expensive than calls), and you are mildly bullish. If you prefer strictly defined risk on both sides, stick to the 0DTE Iron Condor. The Jade Lizard is a higher-level strategy that demands more account capital and closer monitoring.

Frequently Asked Questions