Poor Man's Covered Call
    Wheel Strategy on a Budget

    Get the benefits of covered calls without tying up $20,000+ in shares.
    Use LEAPS to replicate stock ownership for 70–90% less capital.

    What Is a Poor Man's Covered Call?

    Traditional Covered Call

    Buy 100 shares at $200 = $20,000 tied up

    Then sell monthly calls to collect premium

    Poor Man's Version

    Buy 1 LEAPS call (12+ months, 0.80 Delta) = $2,500

    Then sell monthly calls against it — same income, 90% less capital!

    Save $17,500 in Capital

    Use that savings to run 7 more strategies simultaneously

    Live Example: AAPL Poor Man's Covered Call

    Start: AAPL = $200/share

    Step 1: Buy the LEAPS

    Buy Jan 2026 $180 call (420 DTE)

    Delta: 0.85 | Cost: $25/share

    −$2,500 cost

    Step 2: Sell Short Call

    Sell Feb $210 call (30 DTE)

    Delta: 0.30 | Premium: $3/share

    +$300 income

    AAPL closes $208

    Best Case

    Short call expires worthless

    Keep $300 + sell again next month

    AAPL closes $215

    Max Profit

    Short call ITM by $5

    Total profit = $1,100

    AAPL drops to $175

    Losing Case

    Both calls lose value

    Long LEAPS still has time value

    Breakeven, Max Profit & Risk

    Max Profit

    $1,100

    (Short strike − Long strike) × 100 − Net debit
    (210 − 180) × 100 − $2,200 = $1,100

    Breakeven

    $202

    Long strike + Net debit
    $180 + $22 = $202

    Max Loss

    $2,200

    Net debit paid (if stock crashes to $0)

    Poor Man's vs Traditional Covered Call

    FeatureTraditionalPoor Man's
    Capital Required$20,000$2,500
    Monthly Premium$300–$500$300–$500
    Max Loss$20,000$2,500
    Dividends?✅ Yes❌ No
    Theta Decay RiskNone (own shares)Long LEAPS loses value over time

    Golden Rules for Poor Man's Covered Call

    Long LEAPS: 12+ months out, 0.80–0.90 Delta (deep ITM)

    Short call: 30–45 DTE, 0.30 Delta (OTM)

    Spread width: $20+ between strikes for profit room

    Only use on stocks you'd hold long-term

    Roll short call if challenged (don't let it get assigned)

    Watch for early assignment risk around ex-dividend dates

    Exit if LEAPS drops below 60 DTE (Theta accelerates)

    Quick Quiz – Poor Man's Covered Call

    1. What is a Poor Man's Covered Call?

    2. AAPL is $200. You buy a $180 call for $25 and sell a $210 call for $3. What is your max profit?

    3. What makes it "diagonal"?

    4. What Delta should your long call have?

    5. Stock tanks 20%. What happens?

    Correct Answers
    1. You buy a long-dated ITM call + sell a short-dated OTM call
    2. $1,100 ((210 − 180) × 100 − $2,200 net cost)
    3. Long call expires 60+ days after short call
    4. 0.80–0.90
    5. Both lose value — short expires worthless, long bleeds Theta

    Master this strategy to run 7× more positions with the same capital.
    Next → Understanding Delta

    Poor Man's Covered Call FAQ

    Apply This on Treeova

    The PMCC lets you run a covered call strategy with less capital. Here's how to set it up on Treeova.

    1

    Select the LEAPS

    Find a deep ITM call option with at least 12 months to expiration and 0.70+ delta on your target stock.

    2

    Sell Short-Term Calls

    Sell OTM calls (0.20-0.30 delta) with 30-45 DTE against your LEAPS position.

    3

    Monitor the Spread

    Use the prompt-based strategy builder to track the delta relationship and roll timing.

    💡 Example Prompt

    "Set up a PMCC on MSFT. Buy a 0.75 delta LEAPS call 12+ months out, then sell monthly 0.25 delta calls against it. Alert me if the short call reaches 0.40 delta or if the spread profit hits 50%."

    Try it Now →Learn More →

    Last updated: November 24, 2025

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