This strategy is at its best if you are trading a product with IV skewed to the down side. This strategy: Sell an OTM put with high IV skew Hedge by selling an ATM call with higher IV Hedge the short call by buying a low IV Call This works great on indexes since they often have have a IV skew to the down side, example XPS and SPX
Undefined risk can be extremely dangerous, in this case to the downside. Imagine had you sold this strategy on FB before that $80 drop! I learned this lesson in a horrible way years ago following Tasty Trade's recommended Naked strategy. Make a long story short it involved Solar City and me selling a Naked Call just trying to make 50% profit of $80. I ended up loosing -2,300 over night with Elon Musk's purchase! It's best to define your risk!!!
i dont get your point about reducing your cost basis. i get if you do this and receive 1.03, its like you got the stock a little cheaper, but you were talking about 98.97. maybe you mispoke...
In order to execute the trade through tasty works do I need a cash account value to cover the risk? Using cash not margin. Not sure if this is viable for smaller accounts
This strategy can be executed in IRA or margin accounts at tastyworks. IRA accounts would be cash secured, so less leverage there, but margin accounts would offer buying power relief.
So basically a 3 leg strategy with no cover on selling the naked put, that lizard can bite you with an unlimited loss venom, should the underlying tank on you.
This is just an iron condor without the tail hedge. Why would you ever go naked? Just go buy a 5 delta put for .10 and be able to sleep at night. This is a trade where one bad trade wipes out the last 10 good ones.
Dumb question. But I don't think I can sell a naked put on Robinhood? Do I have to do a cash secured put or put credit spread to create the first leg on Robin hood?
Not too sure unfortunately - I would check your account to see if margined puts are allowed - otherwise spreads are the next best thing vs cash secured - cash secured takes too much capital and assumes the stock will go to zero which is a low probability event. Up to you though!
I am curious to learn what would prompt someone to choose a Jade Lizard over a Wide Put Broken Wing Butterfly? A Put BWB will also yield a credit and provide no risk to the upside. Additionally, this strategy requires lower capital than a Jade Lizard, and also provides the opportunity to collect maximum credit if the underlying closes at the peak strike price at expiration. IMO, the only reason to choose a Jade Lizard over a PBWB is if I want to own the stock in the event the trade expires ITM on the Put side - which then begs the question if a Covered Call is probably a better choice than a Jade Lizard.
What's the advantage of this over the Iron Condor Stretegy? The only thing that comes to mind is that it collects a bit more Premium than the Condor, but it would require more Margin capital since the short put is naked.
You have no risk to one side - that is the biggest difference and potentially the biggest advantage, where a jade lizard would be a winner on a big rally and an iron condor would not be.
**at **6:30** - cost basis is 78.97, not 98.97**
Wonderful Strategy & even Wonderfully explained !!
This strategy is at its best if you are trading a product with IV skewed to the down side.
This strategy:
Sell an OTM put with high IV skew
Hedge by selling an ATM call with higher IV
Hedge the short call by buying a low IV Call
This works great on indexes since they often have have a IV skew to the down side, example XPS and SPX
I got bitten by a jade lizard once. Once.
just wondering how and what happened, thx
Undefined risk can be extremely dangerous, in this case to the downside. Imagine had you sold this strategy on FB before that $80 drop! I learned this lesson in a horrible way years ago following Tasty Trade's recommended Naked strategy. Make a long story short it involved Solar City and me selling a Naked Call just trying to make 50% profit of $80. I ended up loosing -2,300 over night with Elon Musk's purchase! It's best to define your risk!!!
I'm thinking of it as a strangle with some upside protection a dollar away.
What is the advantage here over a short strangle? They are very similar...
solid explanation Mike
Where was the upside risk with the short put anyway?
Why dont u just sell a cash covered put than? For that 0.35 more? That u gain from calls?
Yeah, I don't get it. Played with it on Optionstrat. Seems like a waist of time. Moves your downside one percent, but lose more from the upside.
i dont get your point about reducing your cost basis. i get if you do this and receive 1.03, its like you got the stock a little cheaper, but you were talking about 98.97. maybe you mispoke...
i heard him say $78.97 which is his SHORT PUT $80 - $1.03 = $78.97 cost basis or getting a $1.03 discount per share.
Do you try for expiring with profit or 50% of the possible profit or ....what?
We typically close at 50% max profit for jade lizards.
You kids are so cute. I've been doing this for decades, but I call it a 3-legged dog.
In order to execute the trade through tasty works do I need a cash account value to cover the risk? Using cash not margin. Not sure if this is viable for smaller accounts
This strategy can be executed in IRA or margin accounts at tastyworks. IRA accounts would be cash secured, so less leverage there, but margin accounts would offer buying power relief.
tastytrade the margin required would be 20-40% of the position? Or what is the required amount of cash available
tastytrade thank you btw
So basically a 3 leg strategy with no cover on selling the naked put, that lizard can bite you with an unlimited loss venom, should the underlying tank on you.
iron condor without long put leg
Minus premium you received 🌚🌚
UNLIMITED loss means 0. Who in their right mind will put their money on a shady stock?
same would happen to you if you were long any stock
@@86753091974 except with long stock, you have so much potential for upside, where you are getting $1 profit only.....
exzcellent thank you !!!!!!
what are the cons of jade lizard versus naked put ??
Interesting strategy
Its a short strangle (short OTM call and short OTM put
I thought that a short strangle was selling a put and call at the same strike price. The two short strikes here are different strike prices
This is just an iron condor without the tail hedge. Why would you ever go naked? Just go buy a 5 delta put for .10 and be able to sleep at night. This is a trade where one bad trade wipes out the last 10 good ones.
Not if you don't mind owning the stock
That ties up a lot of Margin. Probably only if you want to own the shares. Not for beginners.
Isn't that the same as a Back Spread ?
This is a strangle with a defined risk call option - front ratio is buying one and selling two further OTM of the same option type.
Dumb question. But I don't think I can sell a naked put on Robinhood? Do I have to do a cash secured put or put credit spread to create the first leg on Robin hood?
Not too sure unfortunately - I would check your account to see if margined puts are allowed - otherwise spreads are the next best thing vs cash secured - cash secured takes too much capital and assumes the stock will go to zero which is a low probability event. Up to you though!
What would be the average time to hold this option strategy. 1 week 2 weeks 1 month?
I am curious to learn what would prompt someone to choose a Jade Lizard over a Wide Put Broken Wing Butterfly? A Put BWB will also yield a credit and provide no risk to the upside. Additionally, this strategy requires lower capital than a Jade Lizard, and also provides the opportunity to collect maximum credit if the underlying closes at the peak strike price at expiration. IMO, the only reason to choose a Jade Lizard over a PBWB is if I want to own the stock in the event the trade expires ITM on the Put side - which then begs the question if a Covered Call is probably a better choice than a Jade Lizard.
They are just similar directional trades with different micro-tradeoffs. It's all about your assumption and what you want to achieve with the trade.
How to do middle adjustment in case of but movement
Can you rephrase or send an example to support@tastytrade.com?
@@tastyliveshow sorry for typo mistake. I mean big movement.
Say stock price reach 80 over a night.
This guy is literally speaking Chinese my wife says. She knows nothing about the stock market. LOL
What's the advantage of this over the Iron Condor Stretegy? The only thing that comes to mind is that it collects a bit more Premium than the Condor, but it would require more Margin capital since the short put is naked.
You have no risk to one side - that is the biggest difference and potentially the biggest advantage, where a jade lizard would be a winner on a big rally and an iron condor would not be.
So confusing!
No put protection, sounds like no sleep for a while.
It is a Cash Secured Put (typically) so you would end up with the stock at worst I guess.
Could you bring some well spoken people onboard for your videos ? Good material, subpar execution.