Thread by @theoptpremium

𝗧𝗵𝗲 𝗣𝗼𝗼𝗿 𝗠𝗮𝗻'𝘀 𝗖𝗼𝘃𝗲𝗿𝗲𝗱 𝗖𝗮𝗹𝗹 (𝗣𝗠𝗖𝗖): 𝗧𝗵𝗲 𝗔𝗰𝘁𝘂𝗮𝗹 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆

This is where LEAPS become useful beyond simple stock replacement. The Poor Man's Covered Call is long LEAPS plus short calls you keep cycling for income.

It feels like a covered call, selling premium against equity, but you're tying up a fraction of the capital.

Here's the process:

Pick a liquid stock. You need tight spreads and real volume. Illiquid options are a tax on your returns.

Buy your LEAPS. Go 12 to 24 months out. Target 0.75 to 0.85 delta. Check the extrinsic value, you want it modest compared to the total premium.

Sell a short call. Go 30 to 60 days out. Pick a strike around 10 to 20 delta (out-of-the-money enough to give you breathing room). Collect the premium.

Manage it with rules, not feelings:

Take profits: Close the short call at 50% to 75% of max profit. Don't be greedy waiting for the last nickel.

Manage time: Around 21 to 28 days to expiration, buy back the short call and sell a fresh one 30 to 45 days out.

Defense: If the stock runs up toward your short strike, roll up and out to a higher strike. Keep the income flowing without getting squeezed.

Watch your LEAPS delta. If it drifts too high (over 0.90) or too low (under 0.60) for a while, consider rolling the LEAPS itself to re-center your exposure.

You're not predicting. You're running a process. Small premium wins compound if you stick to the system. ✳️ If this was helpful please follow, like or repost.