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A three-leg strategy specifically constructed so there is genuinely no risk at all on the upside — the trade-off is that the downside behaves like a naked Short Put, with large, undefined risk if the underlying falls hard.

A Jade Lizard combines selling one put with a Bear Call Spread (selling one call and buying a further call above it). The defining feature only shows up when the strikes and premiums are chosen carefully: if the total credit collected across all three legs is at least as large as the width between the two call strikes, the position cannot lose money on the upside, no matter how high the underlying rises.

Legs 2 and 3 together are a Bear Call Spread, capping the maximum loss that spread alone could produce. The put is naked, same as a standalone Short Put. The "no upside risk" property isn't automatic — it depends on the credit collected being large enough relative to how wide the call spread is, and that condition needs to be checked for any specific set of strikes, not assumed.

Three zones, deliberately asymmetric:

1. At or above the short call strike — the full credit is kept as profit, up to the short call strike; beyond it, the profit steps down slightly (as the call spread starts working against you) but — when the credit-exceeds-width condition holds — never turns negative, no matter how high the underlying goes.
2. Between the put strike and the short call strike — flat, maximum profit — the full credit collected.
3. Below the put strike — losses grow the same way a naked Short Put's would, large and effectively unbounded down to the underlying reaching zero.

A Jade Lizard fits a neutral-to-bullish view — you don't want any risk if the underlying rises, and are comfortable with the same downside exposure a Short Put alone would carry. It's a common choice when a trader is confident there's no reason to worry about a rally, and wants to remove that side of the risk entirely while still collecting a solid credit.

Suppose Nifty is trading at 24,000 with a weekly expiry coming up, and lot size is 65. You're neutral to bullish and want zero risk from a rally.

1. Confirm the setup. You want to remove all upside risk while still collecting a credit, accepting downside risk similar to a naked Short Put.
2. Sell 1 put at the 23,800 strike, collecting a premium of 100.
3. Sell 1 call at the 24,200 strike, collecting a premium of 95.
4. Buy 1 call at the 24,300 strike for a premium of 60.
5. Calculate the total credit: 100 + 95 − 60 = 135 points, or ₹8,775 at this lot size.
6. Check the no-upside-risk condition: the call spread is 100 points wide, and the credit (135) exceeds that width — confirming there's no loss possible on the upside.
7. Calculate the reduced profit above the call spread: 135 − 100 = 35 points, or ₹2,275 — smaller than the maximum, but still positive at any price above.
8. Calculate the breakeven: approximately 23,665, below the put strike.
9. See how it resolves at expiry:
   • Nifty finishes between 23,800 and 24,200 → maximum profit of ₹8,775.
   • Nifty finishes at 25,000, or even 40,000 → still a profit of ₹2,275, never a loss.
   • Nifty finishes at 23,000 → a real loss, growing the further it falls, same as a naked Short Put.

Quick reference for the same trade:

Based on the worked example above. Notice the line never dips below zero on the right side of the chart, no matter how far right it goes — that's the "no upside risk" property, confirmed directly, not assumed. Move the cursor over the chart to see profit/loss at any price.

• The "no upside risk" property depends entirely on the credit exceeding the call spread's width. If the strikes or premiums don't satisfy that, this strategy loses its defining feature and carries risk on both sides, like an ordinary strangle-with-a-cap.
• Downside risk is large and effectively unbounded, same as a naked Short Put — the credit collected is compensation for real risk, not free money.
• Margin requirements reflect that downside risk and will be substantial.
• Index options on NSE are typically European-style and cash-settled — no early-assignment risk on the short legs before expiry.