In this article I will show how to create Seagull and Jade Lizard positions. Each example will use SPY options expiring on 10/16/20, with prices as of 10/2/20.
A Seagull is a 3 legged option combination consisting of a Cash Secured Put and a Bull Call Debit Spread. The premium collected from the short put + the short call should be more than the premium paid for the long call. This results in a net credit and a risk free leg to the upside.
A Jade Lizard is a 3 legged option combination consisting of a Cash Secured Put and a Bear Call Credit Spread. The premium collected from the short put + the short call will be more than the premium paid for the long call. This results in a net credit and a risk free leg to the upside.
The following is a sample of a Seagull, a Jade Lizard, and a Combo of both, including risk graphs.
- Underlying: SPY
- Price: $333.84
- Expiration: Oct 16 2020
Seagull
- Entry: Sell the 319 Put + Buy the 334 Call + Sell the 336 Call
- Net Credit: $91
- Profit Zone 1: $91 (SPY between 319 & 334)
- Profit Zone 2: $291 (SPY above $336)
Jade Lizard
- Entry: Sell the 319 Put + Sell the 342 Call + Buy the 343 Call
- Net Credit: $235
- Profit Zone 1: $235 (SPY between 319 & 342)
- Profit Zone 2: $135 (SPY above $343)
Seagull-Jade Lizard Combo
- Net Credit: $326
- Profit Zone 1: $326 (SPY between $319 & $334)
- Profit Zone 2: $526 (SPY between $336 & $342)
- Profit Zone 3: $426 (SPY above $343)
