Poor Man's Covered Call (PMCC) Calculator
See the net cost, capital saved versus a real covered call, approximate max profit and premium yield of a PMCC diagonal. Free, no signup.
What is Poor Man's Covered Call?
Poor Man's Covered Call is a diagonal call spread that imitates a covered call for a fraction of the capital: a long-dated deep-in-the-money LEAPS call replaces 100 shares, and a near-term out-of-the-money call is sold against it to collect premium.
This calculator shows the net debit, how much capital it saves versus owning the shares, and the approximate max profit.
Your PMCC
Compare against a real covered call on the covered call calculator. Read the full strategy on the PMCC guide.
The Trade
Approximation: the long LEAPS is modeled as deep-in-the-money intrinsic value plus a roughly constant residual time value at the near-term expiration. Real results vary with the LEAPS' remaining extrinsic value, interest rates and IV.
How the PMCC Calculator Works
A poor man's covered call replaces the 100 shares of a real covered call with a long-dated, deep-in-the-money LEAPS call. Because the LEAPS moves nearly dollar-for-dollar with the stock, it behaves like a cheaper stand-in — then you sell a near-term out-of-the-money call against it to harvest premium, exactly as you would in a covered call.
The calculator computes the net debit (LEAPS premium − short call premium), then compares it against the roughly share-price × 100 a real covered call would tie up, showing your capital saved. The approximate max profit is the width between the LEAPS and short strikes, times 100, minus the net debit — realized if the stock finishes at or above the short strike. It's an approximation because the long LEAPS retains some time value.
The premium yield is the short call's credit as a percentage of the net debit — the return you collect on capital for this single cycle, which you repeat by selling a new short call each expiration.
Frequently Asked Questions
What is a poor man's covered call?
A diagonal call spread that imitates a covered call for far less capital: a deep-ITM LEAPS call stands in for 100 shares, and a near-term OTM call is sold against it to collect premium.
How much capital does it save?
A covered call costs roughly the share price × 100; a PMCC costs only the net debit of the LEAPS minus the short premium — often 20–40% of that. The calculator shows the exact saving.
What is the max profit?
Approximately (short strike − LEAPS strike) × 100 − net debit, realized if the stock is at or above the short strike at the near-term expiration. The real figure is usually a bit higher because the LEAPS keeps extrinsic value.
What if the short call is assigned?
Your deep-ITM LEAPS covers the assigned short shares. Most traders simply sell the LEAPS and buy back the short call to close the position for its net value, since the LEAPS has gained alongside the stock.