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Advanced Options · ADV-18a · Advanced

Reverse jade lizard

How does reverse jade lizard express a bearish-to-neutral premium with a call tail view?

One concept per page · original written lesson · 556 prose words · authored, not installed or production-approved

What you will learn and prerequisites

Read first: Read a contract and its premium, Rights, obligations and expiration, Defined payoff risk is not margin, Read the whole multi-leg ticket

The reverse jade lizard pairs a short call with a put credit spread. It reverses the directional tilt but leaves an uncovered call tail. Its dangerous direction is therefore materially different from the ordinary construction.

Construction: read every leg

The call collects 2.00 and the put spread 3.00, for 500 credit. The put width is also 500, making the far-downside terminal result zero before costs. Above the call strike, losses can exceed the credit without a finite ceiling.

Read the ticket before the graph

BUY means you own an option right; SELL means you accept a short-option obligation. Positive quantities are long and negative quantities are short in the calculation. Check quantity, call/put, strike, multiplier and expiry before netting premium.

All legs in this example share November 20, 2026 expiration. The entry observation is October 6, 2026, with fictional QLT at 100. These are independent illustrative premiums, not a current option chain or executable quotes. The terminal diagram assumes every leg and any shares are resolved at one common settlement price.

Before expiry: time and volatility

A rally can make the short call increasingly negative Delta and short Gamma. Funding a limited-width put side does not fund the unlimited upside.

Manage the position deliberately

Evaluate upward stress, not only the protected lower side. Adding a higher call would cap the tail but reduce credit. That is a new payoff, not a cosmetic adjustment.

Fictional teaching ticket · no order submission

Reverse jade lizard

QLT • reference spot $100 • independent illustrative prices • quote date 2026-10-06

Read action, quantity, type, strike, expiry, premium and multiplier before the payoff
ActionQtyTypeStrikeExpiryPremium/unitMultiplier
SELL1Call1052026-11-202100
SELL1Put952026-11-204100
BUY1Put902026-11-201100
Opening option cash (+received / −paid)500 USD
Entry option fees in cost variant1.95 USD
Shares included0
Joint-terminal results—not a guarantee of interim cash requirements
MeasureBefore costsAfter stated entry fees
Maximum terminal profit500498.05
Maximum terminal loss magnitudeUnbounded in this terminal modelUnbounded in this terminal model
Breakeven settlement price(s)0, 90, 11090.0195, 109.981

Before-fee zero-P/L interval(s): [[0.0, 90.0]]. An endpoint labeled null denotes an unbounded interval.

This is a mathematical expiry experiment using the displayed legs, not an executable quote. The slider range is not a risk limit.

$0.65 per option contract on entry only. No exit, assignment, financing or tax costs modeled.

Independent fictional premiums, not one simultaneous arbitrage-consistent chain. All legs realized simultaneously at intrinsic at the same expiry; terminal calculations do not model American early exercise, temporary unhedged positions, forced liquidation or live liquidity. Displayed chart domain is not a tail-risk cap.

From opening cash to a settlement result

Read the opening instructions: sell 1 105 call at 2.00; sell 1 95 put at 4.00; buy 1 90 put at 1.00. Option opening cash is $500.00 received as a credit. A received credit is not earned profit while the obligation remains open.

Set the common settlement price to 120.00. Calls have intrinsic value max(S−K,0); puts have max(K−S,0). Subtract the opening premium from each intrinsic value, then multiply by signed quantity and the 100-unit multiplier. Shares contribute their price change from their own cost. The calculation popup shows every leg.

The combined result is $-1,000.00 before costs and $-1,001.95 after illustrative opening fees of $1.95. Exit fees, slippage, funding, dividends and taxes are not included. Opening fees are 0.65 per option contract, not a statement of any broker's pricing.

Maximum terminal profit is $500.00; maximum terminal loss magnitude is unbounded in this model, before costs. Isolated zero-P/L settlement points in the model: 0, 90, 110; zero-P/L intervals are shown in the ticket data, not single isolated breakevens. Move the scenario slider across each strike and explain why the slope changes there. A strike is a contract threshold, not a prediction.

This terminal model is useful for comparing risk shapes, but actual American-style assignment, share delivery, forced liquidation or a failed multi-leg exit can produce a different path. A long protective leg is not an automatic instruction that a broker must exercise it when another leg is assigned.

Open the calculation without leaving this lesson

Calculate this exact ticket

Same-page calculation. Closing restores the lesson position and originating control.

P/L = Σ[q × multiplier × (intrinsic − opening premium)] + shares × (S−share entry) − costs

Intrinsic is nonnegative before the signed quantity is applied. This is a fictional terminal calculation.

  1. -1 × 100 × (15.00 − 2.00) = $-1,300.00: 105 call.
  2. -1 × 100 × (0.00 − 4.00) = $400.00: 95 put.
  3. +1 × 100 × (0.00 − 1.00) = $-100.00: 90 put.
  4. Opening fees: 1.95.
Before costs $-1,000.00; after entry fees only $-1,001.95.

Maximum risk and breakevens

Same-page calculation. Closing restores the lesson position and originating control.

Evaluate S=0, all strikes and the final tail slope; solve P/L=0 on each linear segment.

Same-expiry payoffs are piecewise linear. A finite chart range cannot prove a tail is bounded.

  1. Maximum terminal profit is $500.00; maximum terminal loss magnitude is unbounded in this model, before costs.
  2. Breakeven points: 0, 90, 110; zero-P/L intervals are shown in the ticket data, not single isolated breakevens.
  3. Costs shift net P/L downward without moving the strikes.
Maximum terminal profit is $500.00; maximum terminal loss magnitude is unbounded in this model, before costs.

The whole ticket at common expiry

Vertical: P/L per complete ticket (USD)
Horizontal: Underlying settlement price (USD)

The whole ticket at common expirySolid combined curve is before fees; the second includes only the stated entry fees. Individual-leg lines explain construction. This is terminal intrinsic P/L, not current option value. Price can move outside the displayed range. The complete numerical data are available below.-1,137.13-782.665-428.205-73.7449280.715635.176024487296120
1. Combined terminal P/L before fees2. Combined terminal P/L after entry fees
Solid combined curve is before fees; the second includes only the stated entry fees. Individual-leg lines explain construction. This is terminal intrinsic P/L, not current option value. Price can move outside the displayed range.
See the individual legs behind the combined curveThe whole ticket at common expirySolid combined curve is before fees; the second includes only the stated entry fees. Individual-leg lines explain construction. This is terminal intrinsic P/L, not current option value. Price can move outside the displayed range. The complete numerical data are available below.-10,720-6,472-2,2242,0246,27210,520024487296120
1. Combined terminal P/L before fees2. Combined terminal P/L after entry fees3. Leg 1: SELL 1 105 call4. Leg 2: SELL 1 95 put5. Leg 3: BUY 1 90 put
Read the graph as a data table
Complete graph data; original fictional observations or model calculations
Underlying settlement price (USD)Combined terminal P/L before feesCombined terminal P/L after entry feesLeg 1: SELL 1 105 callLeg 2: SELL 1 95 putLeg 3: BUY 1 90 put
00-1.95200-9,1008,900
750-1.95200-1,6001,400
75.56250-1.95200-1,543.751,343.75
76.1250-1.95200-1,487.51,287.5
76.68750-1.95200-1,431.251,231.25
77.250-1.95200-1,3751,175
77.81250-1.95200-1,318.751,118.75
78.3750-1.95200-1,262.51,062.5
78.93750-1.95200-1,206.251,006.25
79.50-1.95200-1,150950
80.06250-1.95200-1,093.75893.75
80.6250-1.95200-1,037.5837.5
81.18750-1.95200-981.25781.25
81.750-1.95200-925725
82.31250-1.95200-868.75668.75
82.8750-1.95200-812.5612.5
83.43750-1.95200-756.25556.25
840-1.95200-700500
84.56250-1.95200-643.75443.75
85.1250-1.95200-587.5387.5
85.68750-1.95200-531.25331.25
86.250-1.95200-475275
86.81250-1.95200-418.75218.75
87.3750-1.95200-362.5162.5
87.93750-1.95200-306.25106.25
88.50-1.95200-25050
89.06250-1.95200-193.75-6.25
89.6250-1.95200-137.5-62.5
900-1.95200-100-100
90.187518.7516.8200-81.25-100
90.757573.05200-25-100
91.3125131.25129.320031.25-100
91.875187.5185.5520087.5-100
92.4375243.75241.8200143.75-100
93300298.05200200-100
93.5625356.25354.3200256.25-100
94.125412.5410.55200312.5-100
94.6875468.75466.8200368.75-100
95500498.05200400-100
95.25500498.05200400-100
95.8125500498.05200400-100
96.375500498.05200400-100
96.9375500498.05200400-100
97.5500498.05200400-100
98.0625500498.05200400-100
98.625500498.05200400-100
99.1875500498.05200400-100
99.75500498.05200400-100
100.312500498.05200400-100
100.875500498.05200400-100
101.438500498.05200400-100
102500498.05200400-100
102.562500498.05200400-100
103.125500498.05200400-100
103.688500498.05200400-100
104.25500498.05200400-100
104.812500498.05200400-100
105500498.05200400-100
105.375462.5460.55162.5400-100
105.938406.25404.3106.25400-100
106.5350348.0550400-100
107.062293.75291.8-6.25400-100
107.625237.5235.55-62.5400-100
108.188181.25179.3-118.75400-100
108.75125123.05-175400-100
109.31268.7566.8-231.25400-100
109.87512.510.55-287.5400-100
1100-1.95-300400-100
110.438-43.75-45.7-343.75400-100
111-100-101.95-400400-100
111.562-156.25-158.2-456.25400-100
112.125-212.5-214.45-512.5400-100
112.688-268.75-270.7-568.75400-100
113.25-325-326.95-625400-100
113.812-381.25-383.2-681.25400-100
114.375-437.5-439.45-737.5400-100
114.938-493.75-495.7-793.75400-100
115.5-550-551.95-850400-100
116.062-606.25-608.2-906.25400-100
116.625-662.5-664.45-962.5400-100
117.188-718.75-720.7-1,018.75400-100
117.75-775-776.95-1,075400-100
118.312-831.25-833.2-1,131.25400-100
118.875-887.5-889.45-1,187.5400-100
119.438-943.75-945.7-1,243.75400-100
120-1,000-1,001.95-1,300400-100

The failure case

A rally beyond the chart continues to worsen the short call. 'No downside loss before fees' cannot be translated into low overall risk.

Check your understanding

Try the question before revealing its answer. These are reading checks, not trading certification or a site completion record.

What is whole-position terminal P/L at QLT 120.00, before costs?

Reveal the worked answer

$-1,000.00

Use all signed legs, not just the winning leg. The popup and graph use the same ticket.

Critical risk question

Does a terminal loss bound guarantee every early-assignment or liquidation outcome?

Reveal the worked answer

No.

It describes the specified common-settlement payoff. Product rules, stock delivery, capital and execution still matter.

Takeaway

Explain the intended bearish-to-neutral premium with a call tail exposure, each leg's obligation and the adverse price region before using the strategy name.

Sources, assumptions and downloadable script

External references support definitions and conventions. Worked scenarios and prose are original. No current quotes or dealer inventory are claimed.

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