Poor Man's Covered Call (PMCC) Explained
Poor man's covered call (PMCC) explained. Learn setup, strike selection, diagonal spread risk, assignment considerations, and how to scan candidates.
Frequently asked questions
Is a PMCC safer than a covered call on shares?
Not necessarily. A PMCC can use less capital, but the long call can decay and expire, and both legs are option contracts with spread and volatility sensitivity.
Can I be assigned on the short call in a PMCC?
Yes. Short calls can be assigned early on American-style options. Position management should account for how you will respond if assignment risk rises.
What is a common PMCC mistake?
Using an overly short-dated or low-delta long call just to reduce cost. That can make the structure less resilient and harder to manage through normal volatility.