Net debit, strike width, and whether the setup clears the one rule that decides if a PMCC can work.
Diagonal details
Results
A Poor Man's Covered Call is a long LEAPS call with a shorter-dated call sold against it. Max profit and breakeven are the standard simplified estimates (strike width minus net debit); actual results vary because the LEAPS keeps some time value when the short call expires. Requires the short strike to be above the long strike.
Strike width must exceed the net debit
(short strike − long strike) > net debit paid. A spread can never be worth more than its width, so if you paid more than the width there is a price at which you lose money even though the stock went the way you wanted. It's arithmetic you do before opening the trade, not something the market does to you.
A setup that's too tight
Stock at $100. Buy the 18-month $70 call for $35, sell the 30-day $105 call for $1.50.
Net debit: $35.00 − $1.50 = $33.50.
Width: $105 − $70 = $35.00.
Clears the rule by $1.50 — thin. Widen the gap or buy a cheaper long call.
A PMCC is not a conservative covered call. A covered call that goes wrong leaves you holding shares that might recover over years; a PMCC that goes wrong can expire worthless and take the entire debit. Less capital at risk, much higher chance of losing all of it. Full treatment in the PMCC guide.
The Poor Man's Covered Call
A covered call without the shares — cheaper, sharper, and unforgiving if you get the width wrong.
Educational only
These figures come from the numbers you enter and standard options arithmetic. Nothing here is investment, financial, or tax advice, and a good-looking return says nothing about whether the underlying stock is a good idea.
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