# Twisted Sister Calculator - No Downside Risk Source: https://theoptionsbench.com/twisted-sister-calculator/ > Plain-text mirror for AI/LLM ingestion. Canonical HTML page: https://theoptionsbench.com/twisted-sister-calculator/ --- Twisted sister - key facts A Twisted Sister is the mirror of a Jade Lizard: sell a call and a put spread for a credit. It removes the downside risk but leaves a naked short call, so the upside loss is unlimited. Net credit / max profit (call premium + put premium - long put premium) × 100 - kept between the short put and short call strikes. No downside risk when Net credit ≥ put-spread width (short put - long put). Then a crash still nets credit - width. Upside breakeven Short call strike + net credit (per share). Above it the loss is unlimited. Max loss Unlimited on the upside (naked call); the downside is capped by the long put. Direction Neutral-to-bearish - you want the stock flat or lower, never higher. Want the full explanation? Read how to set up a Twisted Sister . How to set it up Outlook: Neutral-to-bearish, with eyes open: the mirror of a jade lizard. A put spread removes the downside risk and you keep premium if the stock stays flat or falls - but the naked short call leaves UNLIMITED upside risk, so only on a name you're confident won't rip higher. Ideal DTE 30-45 days. Never hold the naked call into the final gamma week, and roll it well before the stock pressures the strike. Strike selection Sell the short call around 0.30 delta above a resistance you trust. Then build a NARROW put spread below - short put ~0.20-0.30 delta, long put $1-3 lower - sized so the credit covers the put width and removes the downside risk. The no-downside-risk rule Net credit ≥ put-spread width. That deletes the downside; the calculator flags whether you clear it. The danger that remains - the naked call - is the one you must manage. Enter when IV Rank high (50+) AND no upside catalyst - no earnings, no buyout chatter, no squeeze setup. You're selling a naked call, so anything that can gap the stock up is disqualifying. Take profit Close at ~50% of the credit. The win is capped at the credit and the loss is open-ended, so bank it and reset rather than holding for the last dollar. Manage / exit The naked call IS the risk: roll it up and out before the stock reaches the strike, and set a hard stop (a loss of about 1-2× the credit). Size tiny - with an unlimited tail, position sizing is the only real control. Use it when: A liquid, neutral-to-bearish name with high IV and no upside catalyst, in an account with naked-call approval, margin and the discipline to manage the call actively. Skip it when: You're bullish, the stock could be acquired / squeezed / gapped up, IV is low, or you can't babysit the naked call - use a defined-risk Iron Condor instead. Starting points, not rules - the conventions experienced sellers reach for first. Your account, thesis and risk move every number here. See every strategy's setup -> ## How to use this calculator - Enter the current share price and days to expiration. - Enter the short call - its strike (above the price) and the premium you collect. - Enter the put spread - the short put (sold) and long put (bought) strikes and each premium. - Set the number of contracts - each multiplies the credit and the risk by × 100. - Read the result: net credit, whether there is downside risk, the upside breakeven and the profit zone. **What it tells you:** whether the credit clears the put width to remove downside risk, and where the naked-call upside loss begins. ## How this calculator works A Twisted Sister flips the Jade Lizard across the price. Instead of capping the call side, you cap the **put side**: you sell an out-of-the-money call and an out-of-the-money put, and buy a further-out put below it. The **net credit** is the two premiums you collect minus the one you pay, kept in full whenever the stock finishes between the short put and short call strikes. The mirror of the no-upside-risk rule applies on the downside: when the credit is at least the **put-spread width** (short put minus long put), a crash can only cost the spread's width, which the credit already covers - so below the long put you still keep credit minus width. There is no downside breakeven. The catch is the other tail: the short call has no protection, so above the upside breakeven (call strike plus credit) the loss is **unlimited**. That open upside is why a Twisted Sister is rarer - and more dangerous - than a Jade Lizard. A cash-secured put can only lose down to zero; a naked call can lose without limit. There is deliberately **no return-on-capital figure**, because you cannot cash-secure a naked call: the real capital is broker margin, which rises as volatility spikes. Size it by the rally you could suffer. ## Worked example A fixed, hypothetical illustration - not live market data. A stock trades at $100. With 45 days left you sell the 105 call for $1.50, sell the 95 put for $1.20, and buy the 93 put for $0.40 - a $2.30 net credit against a $2.00-wide put spread. - Net credit / max profit: $2.30 × 100 = $230, kept between $95 and $105. - No downside risk: credit $2.30 ≥ width $2.00, so even below $93 you keep $30. - Upside breakeven: $105 + $2.30 = $107.30 - above it the loss is unlimited. - Max loss: unlimited on a rally; the downside is fully covered. ## Edge cases this calculator handles - Unlimited upside loss. The max-loss field reads "Unlimited" on a rally rather than a comforting number, and no return-on-capital is invented for the naked call. - A credit that doesn't cover the put width. Then the downside is no longer riskless: the calculator flags it and shows the downside loss and breakeven, alongside the still-unlimited upside. - The no-downside-risk floor. When the credit covers the put width, a crash leaves you with credit minus width - a small profit, not a loss - and the calculator shows that floor. - Zero days to expiration. The per-day premium figure drops to "N/A" rather than dividing by zero. Found this useful? Get the bi-weekly email Strategy breakdowns, the edge cases these calculators surface, and trades worth watching - free, no noise. Join the free email -> ## ⚠ Common mistakes - Treating "no downside risk" as safe. The risk simply moved to the upside, where it is unlimited - a far worse tail than a cash-secured put's. The headline is only half the story. - Running it on a name that can rip higher. Avoid anything with buyout, squeeze or upside-catalyst risk. A naked call has no ceiling. - Sizing by the credit. The credit is small and the upside loss is open-ended - size tiny, set a hard stop on the call, and roll it up and out if the stock pushes toward your strike. - Reaching for it when a Jade Lizard fits. If you are bullish-to-neutral, the Jade Lizard keeps the open risk on the bounded downside; the Twisted Sister is for the neutral-to-bearish case only. ## Frequently asked questions What is a Twisted Sister? A Twisted Sister is the mirror image of a Jade Lizard, with the puts and calls swapped. You sell an out-of-the-money call, sell an out-of-the-money put, and buy a further-out put to cap the put side, all for a net credit. Where a Jade Lizard removes upside risk, a Twisted Sister removes downside risk: when the credit covers the put-spread width, a crash cannot lose money. The danger is the upside, where the short call is naked. Why is a Twisted Sister riskier than a Jade Lizard? Because the open side is the upside. A Jade Lizard leaves a cash-secured-put downside that bottoms out at zero - bad, but bounded. A Twisted Sister leaves a naked short call, whose loss is unlimited if the stock rallies. A buyout, a short squeeze or a gap up has no ceiling, so the rare loss can dwarf the credit. Most traders reserve it for names they are confident will not rip higher. What is the maximum loss on a Twisted Sister? There is no maximum on the upside - the naked short call keeps losing as the stock climbs. The downside is defined: the put spread caps it, and when the credit is at least the put-spread width there is no downside loss at all. So the position is defined-risk below and undefined-risk above, which is why it belongs with the undefined-risk strategies. Is a Twisted Sister bullish or bearish? Neutral-to-bearish. You keep the full credit as long as the stock finishes between the short put and short call strikes, and the no-downside-risk structure means a fall does not hurt you. The only thing that does is a rally, so you use it when you expect the stock to stay flat or drift lower - never when you think it could run. When should you use a Twisted Sister? Rarely, and only on a liquid, neutral-to-bearish name with high implied volatility and no upside catalyst, in an account with the approval and margin for a naked call and the discipline to manage it. Avoid it on anything that could be acquired, squeezed or gapped up. If you cannot babysit the short call, a defined-risk iron condor delivers a similar range bet with a capped loss on both sides.