Options trading is a sophisticated arena where strategy and timing converge to create profit opportunities. For traders navigating high implied volatility (IV) environments with a neutral to bullish outlook, the Jade Lizard strategy emerges as a compelling choice. We’re excited to introduce the Jade Lizard Options Scanner on NinjaSpread—a powerful tool designed to help you seamlessly identify and execute this advanced strategy.
What is the Jade Lizard Strategy?
Coined by the innovative minds at Tastytrade, the Jade Lizard strategy is a unique options play that combines a short call spread with a short put. This hybrid approach is tailored for markets expected to remain flat or rise slightly, particularly when IV is elevated and anticipated to decrease.
Components of the Jade Lizard:
- Short Call Spread: Selling a call option and buying another call option at a higher strike price.
- Short Put: Selling a put option, typically out-of-the-money (OTM).
This combination allows traders to collect premium from both sides, capitalizing on time decay and potential IV contraction.
Why Use the Jade Lizard Strategy?
- High Premium Collection: The dual premium from the short call spread and short put increases potential profit.
- Limited Upside Risk: The short call spread caps risk on the upside.
- Flexible Market Outlook: Ideal for neutral to moderately bullish scenarios.
- Benefit from IV Decrease: High IV environments inflate option prices, so a subsequent IV drop favors the strategy.
Introducing Jade Lizard Options Scanner
Finding the perfect Jade Lizard setup can be complex and very time consuming. NinjaSpread simplifies this process with our dedicated scanner, allowing you to filter and pinpoint ideal strategies across all available stocks or focus on specific ones.
Key Parameters to Customize Your Search:
- Reward to Risk (R/R):
- Definition: In this context, R/R represents the potential loss if the stock price plummets to the current 2 Delta level by expiration.
- Why It Matters: Since the Jade Lizard has unlimited downside risk, this metric helps you assess worst-case scenarios and manage risk effectively.
- Put Delta:
- Definition: The Delta value of the short put option.
- Usage: Adjust the Delta range to control the likelihood of the put being in-the-money (ITM) at expiration.
- Net Delta:
- Definition: The combined Delta of the entire strategy.
- Purpose: Determine whether your position has a net positive or negative Delta, aligning with your market bias.
- Credit to Width Ratio (C/W):
- Definition: The percentage of the call spread’s premium relative to its strike width.
- Importance: According to Tastytrade’s guideline, the credit received from the call spread should be at least 30% of the spread’s width.
- Benefit: Ensures you’re adequately compensated for the risk, enhancing the strategy’s profitability.
- Range:
- Definition: The percentage distance between the two breakeven points at expiration.
- Application: Adjust to set how wide you want your profit zone to be.
- IV Rank:
- Definition: A metric showing where the current IV stands relative to its past range.
- Strategy: Filter for stocks with higher IV Rank to maximize premium collection and capitalize on potential IV decreases.
Here is a sample scan that you can run for all the tickers in NinjaSpread.
Enhance Your Strategy with Probability of Profit (POP)
We’ve integrated the Probability of Profit (POP) metric into the Jade Lizard Options Scanner. POP provides a statistical likelihood of the strategy ending profitably, enabling you to make more informed decisions and select trades that align with your risk tolerance.
How NinjaSpread Simplifies the Jade Lizard Strategy
With our user-friendly interface and advanced filtering options, NinjaSpread empowers you to:
- Quickly Identify Opportunities: Save time by narrowing down potential trades that meet your specific criteria.
- Customize Strategies: Tailor each parameter to match your market outlook and risk management preferences.
- Access Comprehensive Data: Leverage real-time analytics and metrics for informed decision-making.
Why Traders Choose NinjaSpread
- Professional-Grade Tools: Designed for traders who demand precision and efficiency.
- Innovative Features: Regular updates and new tools keep you ahead in the dynamic world of options trading.
- Community Support: Join a network of like-minded traders and access educational resources.
Take Your Trading to the Next Level
The Jade Lizard Options Scanner is more than just a tool—it’s your partner in navigating complex market conditions with confidence. Whether you’re a seasoned trader or exploring advanced strategies for the first time, NinjaSpread equips you with the insights and capabilities to optimize your trades.
Ready to unlock the full potential of the Jade Lizard strategy?
Join NinjaSpread today and gain instant access to the Jade Lizard Options Scanner, along with a suite of other powerful trading tools designed to elevate your options trading experience.
Stay tuned for more exciting updates and improvements as we continue to make NinjaSpread the ultimate options trading scanner.
