I recently watched a video on Tastytrade.com about the “Poor Man’s Covered Call” and the profit potential. I have been doing variants of what they explained for years. Tom Sosnoff talks about doing the Poor Man’s Covered Call (PMCC) on weekly’s in this video as well. The video we’ve produced here shows how to complete this with a twist. We’ve done it on an out-of-the-money (OTM) long call with short OTM call closer to the current price of the underlying stock.
Watch TastyTrade.com’s Video on Covered Calls:
A Poor Man’s Covered Call is an options spread trade where you sell a call against a long call further out in time. The front month options should be one strike up and one month out, although you could do weekly’s as well.
The long call would most likely be a LEAP (Long Term Equity Anticipation Security) which is simply an option with more than one year (or so) of time left.
Watch the video for some tips on how to make these more profitibale!
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