The Jade Lizard Options Strategy: A Smarter Way to Trade Stocks with a High IV Rank

In times of elevated implied volatility, many traders instinctively turn to credit spreads or iron condors. But there's a lesser-known strategy that deserves a seat at the table—especially when trading stocks that have a high IV Rank. That strategy is the Jade Lizard.

In this article, I’ll walk through a fresh example of how to construct a Jade Lizard using AI darling Nvidia (NVDA). Whether you’re familiar with the options strategy or hearing about it for the first time, you’ll come away with a step-by-step blueprint you can use when the next opportunity emerges.

What Is a Jade Lizard? A Quick Breakdown

The Jade Lizard combines two premium-selling components:

• A short out-of-the-money (OTM) put

• A short call vertical spread (also known as a bear call spread)

Unlike iron condors, this setup eliminates upside risk—as long as the total premium collected is greater than the width of the call spread.

In practical terms, if you collect $1.35 in premium and the bear call spread is only $1 wide, you can sleep easy. Why? Because that extra $0.35 cushions any upside move and caps your exposure at zero beyond the short call strike.

This makes the Jade Lizard ideal for neutral, slightly bullish or slightly bearish outlooks—especially in underlying stocks with high implied volatility and highly-liquid options chains.

Why Use the Jade Lizard on NVDA?

Nvidia’s recent price swings have made it one of the more volatile names on the board. With an implied volatility (IV) of 67.9 and an IV Rank of 53.9, it’s offering just the kind of elevated premium that makes a Jade Lizard setup particularly attractive.

Let’s walk through an actual setup using May 16 options with 25 days to expiration. NVDA is trading for $96.91, and the expected move (based on implied volatility) was between $83.25 and $110.75.

Step-by-Step: Building the Jade Lizard on BITO

Step 1: Start with the Short Put
To anchor the position, sell an OTM put that makes up the majority of the credit.

• Sell the $80 put for $1.10
  This strike lies just outside the lower expected move and brings in over 80% of our total credit. That alone covers the entire width of a $1-wide call spread—eliminating upside risk.

Step 2: Add the Bear Call Spread
With $1.10 in hand, you’re now free to add a bear call spread based on your probability preference.

• Sell the $109 call, buy the $110 call
  This $1-wide spread brings in roughly $0.25.

Total Premium Collected: $1.32

The upside risk is officially zero, and you have two defined breakeven points:

• Below $80: You may be assigned shares but have a reduced cost basis.

• Above $109: The risk is capped because of the credit cushion.

Understanding Probabilities and Risk

Let’s dig into the math.

• The short put has a 84.20% probability of expiring worthless.

• The bear call spread has a 80.42% chance of success.

• You’ve collected $1.32 in credit, which means:

  • Maximum profit: $132 per contract if NVDA closes between $80 and $109 at expiration.

  • Breakeven: $78.68 (i.e., $80 put strike – $1.32 premium).

  • Downside exposure: You’d be long NVDA at an effective cost of $78.68, which is a 18.8% discount from the market price of $96.91.

Managing the Trade

• If NVDA stays between $80 and $109:
  Let time decay do the heavy lifting. I typically look to exit around 50% to 75% of the max profit—locking in gains early and freeing up capital.

• If NVDA pushes above $109:
  No sweat. Since the credit exceeds the width of the call spread, you have zero upside risk.

• If NVDA drops below $80:
  Consider:

  • Rolling the bear call spread down for more premium.

  • Rolling the short put down and out for a new cycle.

  • Accepting assignment at a deep discount if the fundamentals support it.

The flexibility here is key. Jade Lizards let you adjust dynamically without being boxed in.

Why Jade Lizards Belong in Your Options Playbook

The Jade Lizard strategy gives you:

✅ Defined risk with neutral-to-bullish bias.
✅ Zero exposure on the upside (when structured properly).
✅ High probability of success in volatile names like NVDA (use IV rank to determine trade candiddates).
✅ Customizable entry and exit flexibility.

It’s also a great alternative to iron condors, particularly when volatility skews to the upside and call spreads carry more risk. With Jade Lizards, you stay in control while collecting premium from both sides of the market.

Final Trade Summary: Jade Lizard on NVDA

• Max Profit: $132

• Breakeven: $78.68

• Upside Risk: None

• Directional Bias: Neutral to bullish

Final Thoughts: Why the Jade Lizard Belongs in Every Trader’s Playbook

The Jade Lizard is a highly adaptable premium-selling strategy that shines in environments where implied volatility is elevated—just like we’re seeing in Nvidia today. By collecting more in total premium than the width of the bear call spread, you eliminate upside risk entirely. That means you can lean slightly bullish, neutral or even slightly bearish while still keeping a wide margin for error and favorable probabilities on both sides of the trade.

In our NVDA example, we built a Jade Lizard that brought in $1.32 in total credit, setting up a breakeven 18.8% below the current share price with no risk to the upside. That kind of asymmetry—limited downside exposure, high probability of profit, and flexible exit strategies—is exactly why this setup is a core part of my options playbook.

For traders who rely on probability, structure, and premium, the Jade Lizard is more than just a clever name—it’s a tactical advantage.

Click here to learn more about the Jade Lizard options strategy.

Probabilities over predictions,

Andy Crowder

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