Strategy

Poor Man's Covered Call (PMCC)

By Ryan Silk & Lawrence Polatchek · Reviewed April 2026 · Options Trading Glossary

LEAPS-based alternative to covered calls

What is Poor Man's Covered Call (PMCC)?

Poor Man's Covered Call (PMCC) A diagonal spread that mimics a covered call using a deep in-the-money LEAPS call instead of 100 shares of stock. You buy a long-dated deep ITM call (high delta, ~0.80) and sell a near-term OTM call against it. Requires significantly less capital than a traditional covered call while maintaining similar risk-reward characteristics.

Complete Definition

A diagonal spread that mimics a covered call using a deep in-the-money LEAPS call instead of 100 shares of stock. You buy a long-dated deep ITM call (high delta, ~0.80) and sell a near-term OTM call against it. Requires significantly less capital than a traditional covered call while maintaining similar risk-reward characteristics.

Example

Instead of buying 100 AAPL shares at $150 ($15,000), buy a $120 LEAPS call for $35 ($3,500) and sell monthly OTM calls against it.

AV
Written by
ApexVol Research Team
Quantitative options research
All calculations use live ORATS institutional data — the same source used by professional volatility desks.
RS
Technical reviewer
Ryan Silk, ApexVol Founder
Reviewed for technical accuracy
10+ years trading options. Built ApexVol's pricing engine, Greeks model, and IV-rank methodology.
This guide is updated as market conditions and ORATS data change. Last revised 2026-05-12. How we research →

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