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Poor Man's Covered Call Explained! 📈
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- Опубликовано: 14 авг 2024
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The Poor Man's Covered Call is a type of synthetic option intended to replicate the risk/reward profile of a covered call - but with less capital. If you trade covered calls but lack the capital to trade higher priced securities, then this strategy is for you.
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00:00 Introduction
00:51 Disclaimer
01:25 Agenda
02:45 What is a covered call?
06:00 Building The PMCC
13:00 The OptionsPlay Service
16:25 Comparing Strategies
17:15 Covered Calls
25:50 Covered Call vs Poor Man's Covered Call
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SLIDES - www.dropbox.co...
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Disclaimer: OptionsPlay LLC is not registered as a securities broker-dealer or advisor either with the U.S. Securities and Exchange Commission or with any state securities regulatory authority. OptionsPlay does not recommend the purchase of any stock, ETF, or advise on the suitability of any trade. The information and data contained in OptionsPlay was obtained from sources believed to be reliable, but accuracy is not guaranteed. Neither the information nor any opinion expressed, constitutes a recommendation to purchase or sell a security or to provide investment advice.
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Buying a 12-month call is better than buying a 6-month call for the PMCC for three reasons, because (1) a longer dated option has less time decay per day. (2) a year long option fluctuates less and thus requires less rolling due to drifts in delta. (3) a long-term option allows time for the underlying to recover from price shocks. At the end of the day, we want the long call to mimic the stock's performance, not as a tool to do leverage.
Great insights there. TQVM.
Why do not use a higher delta in the long call than the short call, in case you get assigned in the short call you make money anyways
@@extrabarbabecause high delta calls are expensive. PMCC wants things to be cheap...
What brokerage acct were you using for the daily trades. You moved from Robinhood to another firm.
I don't understand. I buy the Deep in the money call. And then if the stock starts falling? Also if I sell an Out of the money call and the stock closes above strike price on expiration date, what happens? I wish I could see how to do it on a real live PMCC. A real example.
I don't know the date when the gis play was entered. Hence I have no way of know how many months out you placed your long call and likewise your short call.can you please provides that info.
it looks as if this was entered around the beginning of May 2022 and the short call was 43 dte $75strike June 17 and the long call was Oct 21 , 169 dte $62.50strike, look around the 16:50 minute mark on the video and you will see the dates. What I don't understand is how the 62.50 was a .80 delta and was only 7.50 from the market price of the stock price.
She had been fumbling all over the place- telling us 60 to 70 delta but typed 80 and said it was 75.
I felt like pulimg my hair multiple times through the marathon video.
This video was confusing. I wish it were more detailed.
Check out Tony's videos (her boss), she assumes we know more.
Good presentation. However, there is nothing specific about how to manage the trade if it goes against you, which is essential to that kind of trade. A well defined complete game plan is essential.
Amen.
Comparing the profit potential of the CC vs. PMCC, I believe the formula is wrong for CC. It says (cost of shares - premium paid) + short strike. Shouldn't it be the difference of strike price and share price + premium paid? For instance, if you follow the formula verbatim it would be 7075-60= 7015 + 75. That would be incorrect, or the wording simply isn't clear. It would be better worded, strike price- stock entry price + premium received.
Thank your feedback, the wording is intended to amplify that the addition of the premium reduces the cost basis of the shares purchased, capped at the short strike price. It is in this order as the previous row in the table is maximum risk expressed as (cost of shares - premium paid). You are correct in that both equations result in the same number. I do agree that we can add some clarification as the equation is an extension of the first and therefore should be expressed as a negative number. We could absolutely clarify better, thank you for pointing that out!
For example:
Buy 100 AAPL at $140
Sell 1 AAPL $150 call at $2
In the slide deck: (cost of shares - premium paid) + short strike = -($140 - $2) + $150 = -$138 + 150 = $12
Comment: (strike price - share price) + premium paid = ($150 - $140) + $2 = $10 + $2 = $12
@@OptionsPlay Thanks for your response!
Why not sell 0-3 DTE shorts you get a ton more premium.
It would be important to see the date the video was produced.
For a poor mans covered call, is it better to sell a longer dated call(leap) at the money or in the money? How far out is required or recommended to qualify that leap as collateral for the short call being sold weekly or monthly?? What's the risk selling a leap vs owning shares to do this strategy?
For a poor man’s covered call, you would want to sell a 30-40 DTE ~15 Delta call against your long call options. Typically you want to use a 6-9 month LEAP against the short call. You do not want to sell a LEAP, only short dated options.
@@OptionsPlay can you use a 6-9 month Leap Call that is 'out of the money' which would be cheaper than an 'in the money call'? And be less risk?
If you have a PMCC on SPY and keep rolling it out indefinitely, how does it compare to just buying and holding the S&P500 ?
thanks can I have access to the replay of this video
Thank You for your insight!
Thank you for watching!
Is it okay to do this as two separate legs or is it intended traditionally as a spread?
Video is not clear for new guy. Should do it again.
Check out Tony's videos (her boss), she assumes we know more.
Beautiful!! 🥰
So I’m not the only one who noticed how attractive she is
Tony has a better mic why not roll out the same hardware to all employees.
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Tons of insight. Great video
Thank you!
👏👏 Very nice
Why not sell 0-2 DTE shorts to make your long money back fast. You can always roll out if your short is challenged.
Thinking about that already few days... Why would you wait? 0-3 dte with high premium. Your option get executed? not a big deal. Premiums are collected. Execute your leap and start new cycle. Am I wrong? Going to try it
@@s2xy492 Sounds good, the only problem is if the ETF drops a lot, then you have to sell your shorts way OTM. You don't want your short to get run over. So sell at 16 delta or lower a few days out. Then you have time to roll it out & up if challenged.
how'd that work out for you?@@s2xy492
Excellent educational video - plz keep ‘em coming.
Will do!
i only sub because jessica is here
Your sound is washing out.
If your target is 75, thats straight $400 target gain. Why have the hassle of 0.6 premium call over 7000 capital. A bad anlogy ir example. And Madam, why gamble with small unknown stock rather than SPY or QQQ or SPX, which is more liquid, a criteria you emphasized but did not choose. You told to choose 2 months beyond short call and took 4 moths out. So, we got confused like Biden is shown wandering aimlessly on stage in social media these days.
Finally, you could have trimmed the final production video to edit out pauses and keep it under 14 minutes, the average video length for impactful and engaging option classes. Try to keep your fimats like those of SMB Capital's Seth Freudberg.
Major handicap was lack of probability of this strategy making intended profit. That % is super duper imortant before placing the trade.
But I liked your pronunciatons the most.
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