Wonder Boy: The Dragon's Trap

As with all these charm-areas. Leave them until right before the end of the game, to make them as easy as you possibly can.

If you haven't discovered by accident, you can get into the water below the desert through the holes with the enemies in it. Go all the way to the right in this underwater area, to get to the Lizard-charm area. Beat it to unlock this charm.
Remember that while you have the magical sword equipped, you won't break breakable blocks, which can be really handy in here.