In this strategy workshop, Liz and Jenny explain the basics of a "Big Lizard" Spread, a term the ladies coined which is similar to the Jade Lizard. This spread consists of a short At The Money Straddle and a Long OTM Call option. Executing this trade for a credit greater than the width of the Call Spread eliminates risk to the upside.
We place Big Lizard options spreads in liquid stocks that also have a high Implied Volatility Rank (IVR). Generally, we consider anything with an implied volatility rank of over 50% to be high. Additionally, this strategy is best used in stocks greater than $75, as it allows us to collect more credit from the ATM Straddle.
Maximum profit is achieved when the price of the stock "pins" at our short strikes, but if we do the spread for a credit, we won't incur a loss if the price of the stock increases.
See more on this strategy & the Jade Lizard