Calendar & diagonal spreads
How do I roll the short leg of a PMCC into a subsequent weekly expiration cycle to reduce cost basis?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Rolling the short leg of a PMCC into a subsequent weekly expiration means buying back the expiring short call and selling a new short call in the following week, continuing to collect premium against the long LEAPS call.
How it works
This repeated process reduces the effective cost basis of the long LEAPS position over time through accumulated premium, similar to a traditional covered call income strategy but using a synthetic long stock substitute.
An example
After a 30-strike short call expires worthless, a trader sells a new short call for the following week at a similar delta, continuing to collect weekly premium against the LEAPS call.
Risk & limitations
If the stock rallies sharply, the short call can be assigned, and the LEAPS call may need to be exercised or sold under time pressure, potentially at an unfavorable price.
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.