Meta's Legal Challenges Prompt Options Traders to Consider 'Jade Lizard' Strategy

By Priya Anand

Options traders are increasingly adopting the 'jade lizard' strategy in response to Meta Platforms' ongoing legal challenges, which are expected to keep the company's stock rangebound. This strategy is gaining attention as Meta faces significant financial penalties and legal scrutiny.

The 'jade lizard' is a three-leg options strategy that combines a short put, a short call, and a long call. It is designed to yield zero upside risk, allowing traders to profit even if the stock price rises significantly. According to TradeAlgo, this strategy involves selling a put and a call while buying another call at a higher strike price, ensuring that the total credit exceeds the width of the call spread.

For Meta, a real-world example of this strategy includes selling a March 2026 $585 put for $8.40, selling a $630 call for $6.50, and buying a $640 call for $3.80. This results in a total credit of $11.10 against a call-spread width of $10.00, guaranteeing a minimum profit of $110 even if Meta's stock price exceeds $700.

Meta's legal troubles include a significant ruling in New Mexico, where the company was ordered to pay $942 million in penalties and implement structural reforms to address youth mental health issues. Additionally, a high-stakes multi-state lawsuit in California could have further financial implications for the tech giant.