Poor Man's Covered Call Calculator
Calculate potential returns for PMCC trades. Use a long LEAP call instead of stock to reduce capital requirements while selling covered calls.
A PMCC replaces the stock in a covered call with a deep ITM LEAP call option. This reduces capital requirements significantly while maintaining similar profit potential. You sell short-term calls against your LEAP to generate income.
Current price: $100.00
Typically 0.70-0.80 delta, 6-24 months out
Typically 0.30 delta, 30-45 days out
Max Profit
$300.00
Max Loss
$3200.00
Capital Required
$3200.00
Capital Saved
68%
Breakeven
$102.00
Max Profit
$300.00
Understanding the Poor Man's Covered Call
The PMCC is a diagonal spread that mimics a covered call but uses significantly less capital. Instead of buying 100 shares, you buy a deep ITM LEAP call that acts as a stock substitute.
PMCC Guidelines
- Buy LEAP with 0.70+ delta (deep ITM)
- LEAP expiration: 6-24 months out
- Sell short call with ~0.30 delta (OTM)
- Short call expiration: 30-45 days
- Short strike should be above LEAP's breakeven
Key Formulas
Net Debit
Net Debit = LEAP Premium - Short Call PremiumMaximum Profit
Max Profit = (Short Strike - Long Strike) × 100 - Net DebitRelated Calculators
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