Calendar & diagonal spreads
How do I set up a Poor Man’s Covered Put to short a macro sector with extreme capital efficiency?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
A Poor Man's Covered Put buys a deep ITM LEAPS put and sells a short-dated OTM put against it, replicating short-stock-like exposure with substantially less capital than shorting shares.
How it works
This structure lets a trader express a bearish sector view and collect premium income while avoiding the margin requirements and unlimited risk associated with an actual short stock position.
An example
Buy a 1-year 130-strike put on a $100 stock for a high delta, then sell a 30-day 95-strike put against it to collect monthly premium income.
Risk & limitations
The long LEAPS put still decays over time and caps gains if assigned early on the short leg; it does not eliminate directional risk if the sector rallies strongly.
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.