Today’s Know Your Options segment shows you how to set up a Big Lizard, how it differs from a Jade Lizard, and why this trade is beneficial for all account types.
Liz & Jenny start off by explaining why ETFs are a great trading vehicle, especially in high IV environments. Since these are baskets of underlyings, it can be deduced that giant moves are less likely when compared to a single underlying. Liz highlights her “big four,” which are listed below. Liz & Jenny select DIA due to the high IV Rank in the ETF:
IWM - Tracks the Russell
SPY - Tracks the S&P 500
QQQ - Tracks the Nasdaq
DIA - Tracks the Dow Jones
Liz & Jenny break down this trade to its core, and explain the setup first. The Big Lizard is essentially a Jade Lizard where the short put and call are on the same strike. This means that it is a straddle with no risk to the upside with strategic placement of a long call, giving it more of an aggressive appeal. They explain the basic risk and setup of a straddle, and ask you to visualize the profit graph for the straddle. Liz explains how to calculate the breakevens on a straddle, which is simply adding and subtracting the total credit from each side.
The benefit of buying a long call far OTM is that it eliminates risk to the upside when positioned correctly. In this example, they explain that the total credit is $8.10, so if we buy a long call that is 7 points OTM, we have $1.10 of wiggle room. If we buy a call for less than $1.10, any extra capital is profit to the upside. Doing so turns this trade into a neutral to bullish position with no risk to the upside.
Liz & Jenny explain that a short straddle is not allowed in an IRA account, so buying the long call also enables this trade to be placed in any type of account. Additionally, it is much harder to manage a trade that is losing to the upside than losing to the downside, because upside movement usually implies an IV contraction. This makes it difficult to sell additional premium against the position.
Tune in here to learn all about the big lizard!
This video and its content are provided solely by tastylive, Inc. (“tastylive”) and are for informational and educational purposes only. tastylive was previously known as tastytrade, Inc. (“tastytrade”). This video and its content were created prior to the legal name change of tastylive. As a result, this video may reference tastytrade, its prior legal name.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastyfx, LLC (“tastyfx”) is a Commodity Futures Trading Commission (“CFTC”) registered Retail Foreign Exchange Dealer (RFED) and Introducing Broker (IB) and Forex Dealer Member (FDM) of the National Futures Association (“NFA”) (NFA ID 0509630). Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances as you may lose more than you invest.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2025 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.