Calendar & diagonal spreads
What is a Poor Man’s Covered Call (PMCC) and how does it substitute equity shares with a deep ITM LEAPs call?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
A Poor Man's Covered Call replaces 100 shares of stock with a deep in-the-money LEAPS call, then sells a short-dated OTM call against it to generate income with far less capital.
How it works
The LEAPS call's high delta mimics stock-like price sensitivity while requiring a fraction of the capital, though it includes extrinsic value and time decay that owning actual shares does not.
An example
Instead of buying 100 shares at $100 ($10,000), a trader buys a 1-year 70-strike call for $3,200 and sells a 30-day 105 call for income each month.
Risk & limitations
The LEAPS call can lose time value and does not entitle the holder to dividends; if the stock falls sharply, the long call can also expire worthless, unlike stock ownership.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.