This was a big project! I hope you enjoyed it. Do you like the new visuals and presentation style? Important Note: the theoretical simulations displayed in this video were specific to the examples in each simulation. The concepts are general and may not apply 100% to every PMCC setup and situation. Having two options in differing expiration cycles adds more complexity to how option positions perform vs. changes in IV and time. I was using tastyworks in the video. As mentioned, check them out if you're shopping for a new brokerage and take advantage of the signup bonus: geni.us/tastytrade -Chris
I love how much effort time and detail you put in each one of your videos, thank you for everything. On the other hand ,could you do examples with less pricey option premiums, not talking less than .30 in Delta, but still affordable and can be well risk managed, the first spread was north of $3200 a piece, I can only imagine what that premium would be if u did a video about Rich Man's covered call.
Great tutorial. I need a clarification please. Buying DIM call with delta 0.81 is it not too low of a delta? Is it not exposing you to a minimized upside if the stock trades higher, since the price per share would only move up 81% (on a dollar to dollar comparison)? While it requires less capital, wouldn't it be better to buy DIM call with delta lets say 0.94 (95 strike) to benefit from the upsite?
Excellent and didactic explanation of how to set this type of Covered Call. You are a wonderful teacher and you are really helping us, the beginners. Big Thanks !
Dude, I just realized after watching some of the best trading videos on RUclips, that I haven't subbed. Done! Thanks for the patient explanations. You're very good at preempting your viewers' questions and addressing them right away. That's what good teachers do. Gotta clear that confusion before it snowballs.
Thanks for the video! I do have a question, would it make sense to buy a leap option? Buy a leap option with an expiry more than 365 Days+, and short near expiry options. Wouldn't that reduce the initial cost while earning the premiums until the long call expires?
Hey -- Great Video!! But just wondering.. I know you like using the 80ish delta for the Long call but what about instead using two 40 delta long calls which would make for an even smaller capital outlay.. and then still using just one short call or maybe two short calls??
Just out of curiosity, you talked about looking for your strike price utilizing their delta's. Would it,in your opinion, make any sense to calculate your cost basis first and then utilize the delta's for strike prices above that cost basis to determine a good expiration, while still trying to remain under 60 days for expiration. In the event of early assignment, I believe this would still guarantee profit. Your thoughts?
hmm, nice examples and explanation, but I always wonder if trading options shouldn't we take into account the fact that with options you can loose everything because they expire and with pure stock you can keep it and wait for the correction/bear market (like now) to end and ultimately profit (might take some time but most likely) ?
Excellent point and that is a big advantage of the covered call. It's hard to see it from looking at the profit/loss comparison graphs. Yes, if the stock plummets, a PMCC can/will lose all value, while the stock in the CC can be held as long as necessary to recover. If the stock stays flat for 2 years, an options trader might have 4x PMCCs that all lose money while the CC trader could be sitting tight with the long stock without losing any extra money. I plan to do a video on this exact point. Great catch!
Hello, compliments for your videos, they are really a beacon for those studying options... a question, couldn't you sell weekly expiry calls? Thank you
Thank you! I just spent a ton of time creating an Options Trading for Beginners PDF (170+ pages now) that includes my best explanations/visuals explaining key options trading concepts and strategies. Check it out: www.dropbox.com/scl/fi/g7d402wnapqexq344ct73/options-trading-for-beginners-aug15-v1.pdf?rlkey=dort61xyaz1rubndbwbqmhd5i&dl=0 If you want updates to the PDF over the coming months/additional learning resources, consider dropping your email on the page here: geni.us/options-trading-pdf
I want to hear more of the Capital Gains Tax when winning with PMCC options. When is this collected and what % range is collected from PMCC options and is there a way to lessen this tax or bypass this tax?
Great content Chris... you answered each and every question that came to mind as I was watching this video... keep them coming and I wish you all the best !
Chris, late to the party with this question but can you still close the position early with a profit if your short call is deep in the money? Assuming you’ve set up the position properly.
Yes you can. You'd be selling your long option and buying back the short option in the same transaction. Or if you want to continue holding it, you can roll out the short call to a further expiration and ideally a higher strike price, but you can only roll out as far as the expiration of your long call.
Thanks Chris. I've learned a lot from your videos. Just one thing that the PMCC seems to have lower reward/risk ratio. In your AAPL 100/160 call, the reward/risk ratio is about 41% because the short leg is cheaper. So, would you please comment on scenarios that PMCC would still be preferrable even with lower reward/risk ratio. For example, comparing with same DTE on both legs which may have higher reward/risk ratio ? May be PMCC is better for those stocks that have long term growth but volatile in short term ?
It is not 100%correct that buying 100 shares of stock is risker than buying the option. As long as you don't sell stock at a lost, it is not a lost. But purchased Option might lose value if the SPY price falls. Is that correct?
Hi Chris, question on this strategy- if your short call goes ITM and gets assigned you are short 100 shares at that point what would you do? Do you sell your long call at that point manually or does the system automatically exercises against that short call assignment?
You'd have -100 shares at the short call's strike and you'd still have your long ITM call which would protect you from any losses on the -100 shares. You could close the shares and continue holding your long ITM call, or you could close the shares and sell your ITM call to close the entire position. I wouldn't exercise the ITM call if it has lots of extrinsic value in it.
@@projectfinance when you say close the shares and continue holding long ITM call do you mean delivering those 100 shares to the other party at the current stock price? And if we close the shares and sell the ITM call then would those shares be delivered at the long call strike price?
@@JK-cm3jc By closing the shares I mean buying back the short shares. By holding the ITM call you still own you aren't doing anything with it, you're keeping the long call position as is. If you sell your long call you are closing the call it its current price, which is not the same as exercising it. You only buy shares at the call's strike price if you exercise it. The system never automatically exercises your long call. That's for you to do when/if you want to.
@@projectfinance so how are you delivering those shares to the buyer of the call that you were short? Does the cash get deducted from your account equivalent to the price of 100 shares* strike price of short call?
Would it be better not to enter the long and short leg of the PMCC simultaneously? On a red day, enter the long call leg first (cheaper) and on green day, then enter the short call leg b/c you will collect more premium?
You can do that. If you succeed, you'll get an overall better PMCC entry cost. If you're wrong, you'll get an overall worse PMCC entry cost. It depends on you being right about timing the direction.
✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf
Great video brother, thanks as always for the hard work. Do you follow this strategy with calls that are further out in expiration? Or do you try to keep it to 180 days or below?
Thanks! Technically you can buy a call as far out as you want. You'll pay a higher premium the further out you go though, and you'll need to go deeper ITM to get a high delta (> 0.75).
Option ? So, I want to buy $50000 in the money Ford option leaps 9.35 strike cost $4. Then I want to sell sort term calls out of the money with say a .15 delta. Now, what would happen if those out of the money calls become in the money? would I then need to roll them up and/or out to keep from being assigned. And what happens if for some reason I take the assignment. Yes I know that I would have to sell them to the option buyer, but does anything happen to my leap options. Thank you.............................peace
Good question! One reason would be that selling 7-day calls means you'll need to sell strikes much closer to the stock price to collect decent premium.
All you have to is to accept the simple fact of life that you will have to listen to these tapes more than once or twice; but, since the more one knows the easier it will become to learn the next step then in order to master the entire program is to not give up and not quit. As the Buddha was known to opine: "While one can't change the beginning but everyone has the power to change the ending." This young man is more than capable to teach you everything you might need to know to become successful and in this day in time in which the country may well be sliding into a recession where people all over the country will be geting laid off, there is one employer who will always be hiring you -- yourself!
just curious if the PMCC goes as planned throughout its life, when you eventually roll the long call or sell it, do you still get a profit or will that long call diminish over time?
Great video Mike. Have subscribed to your channel. I have a question about assignment in the PMCC. if i get assigned in the short call when the underlying share price becomes higher than the short call, what do i do? Do i have to exercise the Long Call to buy the underlying shares? Many Thanks
I'm Chris not Mike. He's my brother. If assigned you can just buy back the short shares and then sell the long call if you want. If the long call has lots of extrinsic, which it very well may if it has lots of time left until expiration, it shouldn't be exercised.
Thx. for all your time and effort. If a third grader can understand this you’ve succeeded. Not sure why it is called a PMCC when one is shelling out $3000.00(+) when can sell a cash secure put?
CSP would take more than $3,000 in margin on any strike over $30. So a CSP on a $300 stock like in the FB example would require $30,000 in margin (approximately). Thanks for watching!
What if you sold options with just mere days of expiration and doing that multiple times collecting more theta decay gains? Hopefully my comment/question makes sense
You can, though you'd need to sell options very close to the stock price to get any decent premium, making it very easy to see the short call become ITM from any short-term stock rally
WHAT are the DELTAs of these positions?? WHY did you choose the DTEs that you did? Showing specific examples are nice, but we need to be able to be consistent and duplicate the steps for predictable outcomes.
But even on the reguler covered call, wouldn't you pay taxes if you're assigned (within the one year mark)? Great video btw, I'm planning to do a reguler CC and a PMCC this week just to get my feet wet
Each brokerage is different. Typically you just have to cover the full trade cost / maximum loss. So, in a cash account, you could: Buy calls and puts Short puts (cash-secured -- the entire max loss must be held as margin) Trade vertical spreads (call spreads and put spreads -- buy or sell) Covered calls (long 100 shares + 1x short call) I might be missing some but that's it. No short stock. No short naked calls. No buying stocks on margin.
A vertical spread consists of two options in the same expiration cycle at different strike prices. A PMCC is technically a "diagonal spread" because we have two options at two different strike prices and expiration dates.
Dangerous strategy, I just entered the values now. Debit price for the 1st $AAPL position is $22.72 at 4:23pm eastern. It's trading at a $443 loss right now.
@@projectfinance True but even for a slight bit more premium and a higher strike price the long call could be changed to a long leap, or even a 2 year leap allowing for the potential of selling for premium multiple times if you don't take assignment. I like the breakdown on these video's you do, The risk needs to be emphasized. The person selling this can loose everything, I'm sorry I'm just trying to do my due diligence, This strategy is extreme high risk, especially and this bear market.
I think the real risk is not owning the stock. The loss in the PMCC is real. In the case of Covered call is unrealized. But because you own the stock you can continue collecting dividends, and placing more covered call. Did I miss something?
Depends on the amount of capital and hence safety net one has at his disposal. Someone who has less capital also has a smaller safety net so the pmcc has a much smaller opportunity cost compared to cc. In contrast a large cap entity can afford large drawdowns of owning stock all the while collecting dividends and no upside risk. Also a large capital investor has a greater influence on the share price and has greater incentive to demand shares compared to a the poor man who really isn't gonna dent a share price by holding 100 shares. Correct me if I'm wrong?
For the short.. why not choose even a shorter dte? Like weeklies or even dailies on qqq/spx. Is it because of gamma risk? Also.. If doing pmcp, would the date and strike selections be similar?
You could go shorter DTE, but you'll need to choose an even closer strike to the stock price to get a decent premium, "constricting" the upside potential on the stock. For instance, if the stock is $100 and you bought the 90/110 PMCC with 120 DTE on the 90 call and 60 DTE on the 110 call, you might have to go to the 103 or 105 strike if you short a 7-14 DTE call, otherwise you'd get no premium. I'd recommend setting up a PMCC on your trading platform and compare the premiums on short calls vs. strike prices vs. expirations!
This was a big project! I hope you enjoyed it. Do you like the new visuals and presentation style?
Important Note: the theoretical simulations displayed in this video were specific to the examples in each simulation. The concepts are general and may not apply 100% to every PMCC setup and situation. Having two options in differing expiration cycles adds more complexity to how option positions perform vs. changes in IV and time.
I was using tastyworks in the video. As mentioned, check them out if you're shopping for a new brokerage and take advantage of the signup bonus: geni.us/tastytrade
-Chris
why are you going 120-180 for the long call and not just go 365?
You are by far the best content creator about investing and options, perfect quality, easy explanation…
I appreciate that!
I love how much effort time and detail you put in each one of your videos, thank you for everything. On the other hand ,could you do examples with less pricey option premiums, not talking less than .30 in Delta, but still affordable and can be well risk managed, the first spread was north of $3200 a piece, I can only imagine what that premium would be if u did a video about Rich Man's covered call.
Great tutorial. I need a clarification please. Buying DIM call with delta 0.81 is it not too low of a delta? Is it not exposing you to a minimized upside if the stock trades higher, since the price per share would only move up 81% (on a dollar to dollar comparison)? While it requires less capital, wouldn't it be better to buy DIM call with delta lets say 0.94 (95 strike) to benefit from the upsite?
Excellent and didactic explanation of how to set this type of Covered Call. You are a wonderful teacher and you are really helping us, the beginners. Big Thanks !
Thank you so much! Everything was explained in a clear and concise manner, including assignment and tax!
Thanks for watching/commenting! I appreciate the feedback. I'm glad this video helped!
Dude, I just realized after watching some of the best trading videos on RUclips, that I haven't subbed. Done! Thanks for the patient explanations. You're very good at preempting your viewers' questions and addressing them right away. That's what good teachers do. Gotta clear that confusion before it snowballs.
Thank you for the sub and kind words 😁
hi Chris, when can I see daily call/put open interest chart of sp500
Thanks for the video! I do have a question, would it make sense to buy a leap option? Buy a leap option with an expiry more than 365 Days+, and short near expiry options. Wouldn't that reduce the initial cost while earning the premiums until the long call expires?
Hey -- Great Video!! But just wondering.. I know you like using the 80ish delta for the Long call but what about instead using two 40 delta long calls which would make for an even smaller capital outlay.. and then still using just one short call or maybe two short calls??
Just out of curiosity, you talked about looking for your strike price utilizing their delta's. Would it,in your opinion, make any sense to calculate your cost basis first and then utilize the delta's for strike prices above that cost basis to determine a good expiration, while still trying to remain under 60 days for expiration. In the event of early assignment, I believe this would still guarantee profit. Your thoughts?
Curious, if you are going out so long, why do a deep ITM call? Seems like you'll be paying a lot more than you need to? Great video and thank you!
Hey where you doing the backtest and get the data?
hmm, nice examples and explanation, but I always wonder if trading options shouldn't we take into account the fact that with options you can loose everything because they expire and with pure stock you can keep it and wait for the correction/bear market (like now) to end and ultimately profit (might take some time but most likely) ?
Excellent point and that is a big advantage of the covered call. It's hard to see it from looking at the profit/loss comparison graphs.
Yes, if the stock plummets, a PMCC can/will lose all value, while the stock in the CC can be held as long as necessary to recover.
If the stock stays flat for 2 years, an options trader might have 4x PMCCs that all lose money while the CC trader could be sitting tight with the long stock without losing any extra money.
I plan to do a video on this exact point.
Great catch!
Outstanding teacher
Thank you Angelo!
Wow! Some of the clearest, most practical information on a PMCC I have seen yet. Nice job.
Thank you! I’m happy you enjoyed the details in this one.
What if you have a OTM leap? Can you still sell covered call?
Hello, compliments for your videos, they are really a beacon for those studying options... a question, couldn't you sell weekly expiry calls? Thank you
Thanks so much! Yeah you could short weekly calls.
thank you
Do you have pay attention to any of the Greeks for the PMCC postions to take?
In your example why don't you list the etas for each option as well as the iV? I would consider these fairly important facts to know.
Great explanations and examples. Best options channel I've found so far
Thank you! I just spent a ton of time creating an Options Trading for Beginners PDF (170+ pages now) that includes my best explanations/visuals explaining key options trading concepts and strategies. Check it out: www.dropbox.com/scl/fi/g7d402wnapqexq344ct73/options-trading-for-beginners-aug15-v1.pdf?rlkey=dort61xyaz1rubndbwbqmhd5i&dl=0
If you want updates to the PDF over the coming months/additional learning resources, consider dropping your email on the page here: geni.us/options-trading-pdf
And this is done as a spread correct?also at anytime would you leg out and close one leg out before the other or you cant?
Verry nice vid, however, i realy mis a section about risks. A leap does expire. stocks dont. what if it gos to the moon? etc
high quality video. examples, clear explanation, nice charts.... thank you
Thanks Maiver!
Is there a way to substitute a Put option instead of writing a call? I know you would give up the premium. Would it be a viable strategy?
I want to hear more of the Capital Gains Tax when winning with PMCC options. When is this collected and what % range is collected from PMCC options and is there a way to lessen this tax or bypass this tax?
Great content Chris... you answered each and every question that came to mind as I was watching this video... keep them coming and I wish you all the best !
Thank you for the view and feedback Navin! I appreciate the comment.
Chris, late to the party with this question but can you still close the position early with a profit if your short call is deep in the money? Assuming you’ve set up the position properly.
Yes you can. You'd be selling your long option and buying back the short option in the same transaction. Or if you want to continue holding it, you can roll out the short call to a further expiration and ideally a higher strike price, but you can only roll out as far as the expiration of your long call.
Thanks Chris. I've learned a lot from your videos. Just one thing that the PMCC seems to have lower reward/risk ratio. In your AAPL 100/160 call, the reward/risk ratio is about 41% because the short leg is cheaper. So, would you please comment on scenarios that PMCC would still be preferrable even with lower reward/risk ratio. For example, comparing with same DTE on both legs which may have higher reward/risk ratio ? May be PMCC is better for those stocks that have long term growth but volatile in short term ?
You are the men for options on RUclips, keep going i love you !!
Thanks, will do!
man your explanations are so damn good, thanks ! I want to try this PMCC, i tried before, but just realised with you that I did it wrong
So if the short call is less than the stock price at expiration , do I lose the LEAP or long term call altogether?
It is not 100%correct that buying 100 shares of stock is risker than buying the option. As long as you don't sell stock at a lost, it is not a lost. But purchased Option might lose value if the SPY price falls. Is that correct?
Can I do this with discontinued rare holiday items on the Grand Exchange?
works especially well with h'weens
@@projectfinance millions and millions billions and trillions
Excellent explanation. Thanks Chris.
Hi Chris, question on this strategy- if your short call goes ITM and gets assigned you are short 100 shares at that point what would you do? Do you sell your long call at that point manually or does the system automatically exercises against that short call assignment?
You'd have -100 shares at the short call's strike and you'd still have your long ITM call which would protect you from any losses on the -100 shares. You could close the shares and continue holding your long ITM call, or you could close the shares and sell your ITM call to close the entire position. I wouldn't exercise the ITM call if it has lots of extrinsic value in it.
@@projectfinance when you say close the shares and continue holding long ITM call do you mean delivering those 100 shares to the other party at the current stock price? And if we close the shares and sell the ITM call then would those shares be delivered at the long call strike price?
@@JK-cm3jc By closing the shares I mean buying back the short shares. By holding the ITM call you still own you aren't doing anything with it, you're keeping the long call position as is. If you sell your long call you are closing the call it its current price, which is not the same as exercising it. You only buy shares at the call's strike price if you exercise it. The system never automatically exercises your long call. That's for you to do when/if you want to.
@@projectfinance so how are you delivering those shares to the buyer of the call that you were short? Does the cash get deducted from your account equivalent to the price of 100 shares* strike price of short call?
Would it be better not to enter the long and short leg of the PMCC simultaneously? On a red day, enter the long call leg first (cheaper) and on green day, then enter the short call leg b/c you will collect more premium?
You can do that. If you succeed, you'll get an overall better PMCC entry cost. If you're wrong, you'll get an overall worse PMCC entry cost. It depends on you being right about timing the direction.
Does anyone know a platform where I can back test options to see their past performance? For free if possible
Just made my first million due to you brother😢
You are highly underrated
What do you do? Swing or Intra
Superb video. Tranks. Is it possibile a video about ratio and backspread spread?
Thank you! I can do one, I haven't done one on those strategies before.
Welcome back Sir
🙏
Amazing! Thanks for the knowledge and the thorough easy-to-grasp information and examples.
I appreciate it! I'm glad you enjoyed the detail and examples.
✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf
Great video brother, thanks as always for the hard work. Do you follow this strategy with calls that are further out in expiration? Or do you try to keep it to 180 days or below?
Thanks! Technically you can buy a call as far out as you want. You'll pay a higher premium the further out you go though, and you'll need to go deeper ITM to get a high delta (> 0.75).
@@projectfinance Thanks man! Thought it was also a good way to avoid short term capital gains tax on at least that leg
How do you manage your winners?
Option ? So, I want to buy $50000 in the money Ford option leaps 9.35 strike cost $4. Then I want to sell sort term calls out of the money with say a .15 delta. Now, what would happen if those out of the money calls become in the money? would I then need to roll them up and/or out to keep from being assigned. And what happens if for some reason I take the assignment. Yes I know that I would have to sell them to the option buyer, but does anything happen to my leap options. Thank you.............................peace
Very well done as usual_Many thanks!!
Thanks Zedo!
Quick question: Why not sell 7DTE call every week? Wouldn't this net better returns in the long run?
Good question! One reason would be that selling 7-day calls means you'll need to sell strikes much closer to the stock price to collect decent premium.
All you have to is to accept the simple fact of life that you will have to listen to these tapes more than once or twice; but, since the more one knows the easier it will become to learn the next step then in order to master the entire program is to not give up and not quit. As the Buddha was known to opine: "While one can't change the beginning but everyone has the power to change the ending." This young man is more than capable to teach you everything you might need to know to become successful and in this day in time in which the country may well be sliding into a recession where people all over the country will be geting laid off, there is one employer who will always be hiring you -- yourself!
Chris your name keeps coming up! I am going to do this. Thanks for all you do!
just curious if the PMCC goes as planned throughout its life, when you eventually roll the long call or sell it, do you still get a profit or will that long call diminish over time?
18:30 mark
guess you answered this, ty!
Great video Mike. Have subscribed to your channel. I have a question about assignment in the PMCC. if i get assigned in the short call when the underlying share price becomes higher than the short call, what do i do? Do i have to exercise the Long Call to buy the underlying shares? Many Thanks
I'm Chris not Mike. He's my brother. If assigned you can just buy back the short shares and then sell the long call if you want. If the long call has lots of extrinsic, which it very well may if it has lots of time left until expiration, it shouldn't be exercised.
@@projectfinance Thank you Mike
Thx. for all your time and effort. If a third grader can understand this you’ve succeeded.
Not sure why it is called a PMCC when one is shelling out $3000.00(+) when can sell a cash secure put?
CSP would take more than $3,000 in margin on any strike over $30. So a CSP on a $300 stock like in the FB example would require $30,000 in margin (approximately).
Thanks for watching!
What if you sold options with just mere days of expiration and doing that multiple times collecting more theta decay gains? Hopefully my comment/question makes sense
You can, though you'd need to sell options very close to the stock price to get any decent premium, making it very easy to see the short call become ITM from any short-term stock rally
WHAT are the DELTAs of these positions?? WHY did you choose the DTEs that you did?
Showing specific examples are nice, but we need to be able to be consistent and duplicate the steps for predictable outcomes.
VERY well done. I would recommend your videos to anyone who needs education in options/trading.
Thank you for that! I spent a lot of time on this video so I'm glad to hear that time was well spent.
Excellent explanation. You add the what-if scenarios which no one else does. If I am going to get burned I want an "heads-up".
But even on the reguler covered call, wouldn't you pay taxes if you're assigned (within the one year mark)? Great video btw, I'm planning to do a reguler CC and a PMCC this week just to get my feet wet
Yes correct. Just a hypothetical though if you were never assigned on the shorts.
So is a PMCC essentially a Bull Call Spread with each leg having different DTE?
Correct. It's a "diagonal spread" because it's two options in two different expirations and strike prices.
@@projectfinance Got it thanks
Can you do a 2022 portfolio update?
Hi, Chris, PMCC is a bullish or bearish strategy?
Bullish if set up correctly (as described in video)
Pmcc best option starge
so what kind of strategies are available to traders using a cash account? to my understanding, you can only short options on margin accounts
Each brokerage is different. Typically you just have to cover the full trade cost / maximum loss.
So, in a cash account, you could:
Buy calls and puts
Short puts (cash-secured -- the entire max loss must be held as margin)
Trade vertical spreads (call spreads and put spreads -- buy or sell)
Covered calls (long 100 shares + 1x short call)
I might be missing some but that's it.
No short stock. No short naked calls. No buying stocks on margin.
@@projectfinance thought so. thank you for the reply though,
Excellent explanation!
Great presentation; informative too.
Glad you liked it!
Life changing strategy!!
Really good explanations!
Thanks John! I'm glad they were received well by you.
Bro thanks
Can you explain how is this different than a verticle spread
A vertical spread consists of two options in the same expiration cycle at different strike prices.
A PMCC is technically a "diagonal spread" because we have two options at two different strike prices and expiration dates.
@@projectfinance would ut be possible to go over this in a vid and the pros and cons when comparing the two
Thank you sir. You have given me gold!
You're welcome! Thanks so much for watching!
Dangerous strategy, I just entered the values now. Debit price for the 1st $AAPL position is $22.72 at 4:23pm eastern. It's trading at a $443 loss right now.
@@kevinroy1736 Can't avoid risk. The CC advantage is an investor can hold their AAPL stock as long as it takes for the stock to recover.
@@projectfinance True but even for a slight bit more premium and a higher strike price the long call could be changed to a long leap, or even a 2 year leap allowing for the potential of selling for premium multiple times if you don't take assignment. I like the breakdown on these video's you do, The risk needs to be emphasized. The person selling this can loose everything, I'm sorry I'm just trying to do my due diligence, This strategy is extreme high risk, especially and this bear market.
i want to know who will buy my call option Deep in the money, because I don't have enough money to buy 100 stock
Hi all, is this strategy really called poor man covered call? Isn't this just some kind of spread strategy?
what happens if your short call expires in the money?
You would be forced to exercise your long options and deliver the shares…
The goat
I think the real risk is not owning the stock. The loss in the PMCC is real. In the case of Covered call is unrealized. But because you own the stock you can continue collecting dividends, and placing more covered call. Did I miss something?
Excellent point and that IS the biggest risk that isn't clear when looking at the PMCC vs CC risk graphs. I'll be making a video about it.
Depends on the amount of capital and hence safety net one has at his disposal. Someone who has less capital also has a smaller safety net so the pmcc has a much smaller opportunity cost compared to cc. In contrast a large cap entity can afford large drawdowns of owning stock all the while collecting dividends and no upside risk. Also a large capital investor has a greater influence on the share price and has greater incentive to demand shares compared to a
the poor man who really isn't gonna dent a share price by holding 100 shares. Correct me if I'm wrong?
For the short.. why not choose even a shorter dte? Like weeklies or even dailies on qqq/spx. Is it because of gamma risk?
Also.. If doing pmcp, would the date and strike selections be similar?
You could go shorter DTE, but you'll need to choose an even closer strike to the stock price to get a decent premium, "constricting" the upside potential on the stock.
For instance, if the stock is $100 and you bought the 90/110 PMCC with 120 DTE on the 90 call and 60 DTE on the 110 call, you might have to go to the 103 or 105 strike if you short a 7-14 DTE call, otherwise you'd get no premium.
I'd recommend setting up a PMCC on your trading platform and compare the premiums on short calls vs. strike prices vs. expirations!
Pmcc vs cc, cc has long that has no expiration so no competition
PMCC definitely has better ROC than CC.
Definitely true in a lot of cases! Depends on how you set it up though. The further ITM The long call is, the more closely it will resemble a CC.
Automatic liked + commented :)
🙏
How is no one asking if he’s Mike Butler’s twin?
We are brothers
Great videos! We appreciate the time and effort.
Poor Man's Covered Call is just a shorthand name for Naive Poor Man Loses All His Money.
Wondering if there is a broke man’s covered call 😂
Yeah this is it 😂
You say it’s less risky because you’re risking less capital, but I’d say it’s more risky as there’s a higher chance of achieving a loss
Excellent and fair point. It fits into a video I have planned on PMCCs
@@projectfinance I'm looking forward to it!