Poor Man's Covered Call
Outlook: Bullish
Calendars and diagonals
Diagonal with deep-ITM long-dated call replacing 100 shares. Capital-efficient covered call.
Max profit
Approximately (short strike - long strike) - net debit.
Max loss
Net debit paid (less than buying 100 shares).
Breakeven
Long strike + net debit.
Legs
Long
1×
call
ATM −50
Short
1×
call
ATM +10
Structure
Long 1 deep-ITM call 180+ DTE (delta around 0.85) + short 1 OTM call 30-45 DTE.
When to use
Long-term bullish view on a quality name without committing to 100 shares. Want monthly income from the short leg.
Example
SPY at $450. Long 400 call 180 DTE $56 (vs $45,000 for 100 shares). Sell 460 call 30 DTE for $3 each month.
Notes
- Manage assignment risk on the short leg around ex-dividend. Long leg has its own theta to monitor.
Build it in the simulator
Open this structure in the app, adjust spot, IV, and DTE, and watch the payoff and Greeks move.
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