Poor Man's Covered Call (PMCC)
Replace owning 100 expensive stock shares with a deep ITM LEAPS Call (>80 Delta), then continuously sell short-term OTM Calls for recurring income.
Interactive Payoff Curve & Greeks Simulation
Visualize the theoretical profit & loss at expiry vs T+0 immediate day curves. Drag the simulation slider to stress-test your trade.
Option Payoff Curve & Greeks
Net Option Greeks (Sensitivity Profile)
Values per 1 Lot standard unitMulti-Leg Position Structure (2 Legs)
| Action | Instrument / Strike | Type | Expiry | Approx Delta | Est. Premium | Qty Ratio |
|---|---|---|---|---|---|---|
| BUY | 3,400 CE (Deep ITM LEAPS) | CALL | 6-Month Expiry | +0.85 | ₹520 | 1x |
| SELL | 3,950 CE (OTM) | CALL | Monthly Expiry | -0.25 | ₹65 | 1x |
How the Structure Works
The 85-Delta LEAPS call mimics 85% of the stock price action with minimal time decay. The monthly short call generates consistent 2-4% monthly cash flow.
The Poor Man's Covered Call (PMCC) achieves the exact same monthly cash flow as a standard Covered Call but requires 75% less capital. Instead of buying 175 shares of TCS for ₹6,65,000, you buy a deep In-The-Money (85-Delta) long-dated LEAPS call for ₹91,000 and sell monthly 30-Delta calls against it every 30 days.
Institutional Strike Selection Rules
Phased Execution Blueprint
Follow this structured sequence to eliminate emotional hesitation during order entry, lifecycle management, and final exit.
LEAPS Selection
Buy deep ITM call with Delta ≥ 0.80 and >180 DTE.
Monthly Covered Call Selling
Sell 30 DTE call above total breakeven.
Interactive Margin & Position Size Calculator
Calculate exact lot sizing based on the 1-2% risk rule to preserve capital against Black Swan events.
Options Position Size & Max Risk Calculator
Total net liquid equity in your brokerage account
Recommended: 1.0% - 2.0% for disciplined longevity
Wing width max loss or defined mental/system SL
Rigorous Risk Rules & Adjustment Protocols
Non-negotiable parameters for stop-loss triggers, portfolio caps, and firefighting adjustments when market tests your strikes.
- Roll short call up and out if tested.
Saves 70-80% capital compared to holding delivery shares.
TCS Poor Man's Covered Call Trade Walkthrough
TCS consolidated at ₹3,800.
Bought June 3400 CE @ ₹520 / Sold Jan 3950 CE @ ₹65 (Repeated 4 times)
- Generated 38% cash ROI on ₹91k capital over 5 months.
Common Mistakes to Avoid
Why it happens: If stock explodes, you take a loss on assignment.
Solution: Always sell short strike higher than (Long Strike + Debit).
Institutional Pro Tips
Poor Man's Covered Call (PMCC) FAQs
Why is it called "Poor Man's" Covered Call?
Because it gives the exact same cash income as a covered call without needing lakhs of rupees to purchase 100 shares of expensive stock.
Alternative & Complementary Strategies
Hold underlying stock shares and sell an OTM Call option against them to generate consistent recurring monthly cash income.
Buy a longer-dated ITM Call and sell a shorter-dated OTM Call across different expiration cycles to exploit time decay differential.
Buy an ATM Call and simultaneously sell a higher OTM Call to reduce cost, cap risk, and neutralize theta decay.