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PMCC: the capital-efficient covered call

Replace 100 shares with a deep in-the-money LEAPS call and sell the same short calls against a fraction of the capital.

Educational, not advice. A PMCC has failure modes a covered call does not, and the leverage cuts both ways. This page explains the structure and how to record it here; it is not a recommendation to trade it. See the risk disclaimer.

The idea in one paragraph

A covered call needs 100 shares. A Poor Man's Covered Call replaces them with a deep in-the-money long call, far out in time — typically 9 to 15 months, at a delta around 0.80 — and sells the usual short-dated calls against it. The long call behaves like the shares for most price moves, but costs a fraction of what the shares cost. Same income shape, much less capital. It is a diagonal call spread that you keep re-selling the front leg of.

Why it is capital-efficient

A $150 stock, one contract, illustrative numbers:

	Covered call	PMCC
Long side	100 shares @ $150 = $15,000	1× 120-strike call, 12 months, ~0.80 delta @ $38 = $3,800
Short side	Sell a ~30 DTE call around 0.25 delta, say the 165 for $2.00 — identical in both.
Capital at risk	$15,000 (less premium collected)	$3,800 (less premium collected)
$200 of monthly premium is…	~1.3% on capital	~5.3% on capital

Roughly four times the return on capital for a similar income stream. That is the whole appeal — and it is leverage, which means the losing months are magnified in exactly the same proportion.

What you give up

The long call decays. Shares do not expire; a LEAPS bleeds theta every day, slowly at first and faster as it ages. Your short premium has to out-earn that decay, not just be positive.
Volatility now works against your long leg. An IV crush hurts the LEAPS even if the stock is unchanged. A covered call has no such exposure.
No dividends and no votes. You do not own the shares. On a dividend-paying underlying, that yield is simply absent — and it also raises the odds of your short call being assigned early, just before an ex-dividend date.
It has an expiry date. The LEAPS must eventually be rolled or closed, and rolling costs a debit and crystallises whatever it has lost.
Two spreads to cross, repeatedly. Deep ITM long-dated calls are often thinly quoted. Getting in and out is more expensive than it looks on the mid.
A sharp drop is worse, proportionally. The LEAPS loses value faster in percentage terms than the shares do, and unlike shares it cannot simply be held for five years while it recovers.

Structuring it

The long call

Delta ~0.75–0.85. Deep enough to track the stock closely, so the position behaves like shares. Cheaper, lower-delta calls stop being a stock substitute and start being a directional bet.
9–15 months out. Long enough that theta is still slow, so most of the decay is deferred.
Extrinsic value as low as you can get it at that delta — extrinsic is what you pay for and what decays.

The short call

30–45 DTE, delta 0.20–0.30 — the same choices as a covered call.
The one rule that matters: short strike > long strike + net debit paid. If it is not, and the stock runs past the short strike, the spread caps out at a level below what you paid, and you are locked into a loss no roll can fix. Check this before selling the short, not after.
Prefer rolling to being assigned. You have no shares to deliver. Assignment leaves you short 100 shares against your long call — legitimate, but not the position you designed.

Tracking it here

One campaign for the life of the long call. Strategy type PMCC — or IPMCC if you are running short strikes close to the money for income. Roll the LEAPS and it is still the same campaign; the running total is the only honest measure of whether the structure has paid for its own decay.

New Campaign → PMCC, your underlying, the right portfolio.
Buy the LEAPS: Option · Buy · 1 · price per share (38.00, not 3800) · strike · expiration · Call.
Sell each short call into the same campaign as you write it.
At each short expiration, use Expire — OTM closes it at $0 and you sell the next one. Rolling early is just two trades: buy to close, sell the new one.

What the campaign page tells you that a spreadsheet does not

Question	Where
How much runway is left on the LEAPS?	Long DTE on the dashboard, right next to Short DTE. That column exists for this strategy. Under ~6 months, decay starts to bite and a roll becomes a real decision.
Is the whole structure profitable, not just this month?	Total P/L — realized short premium plus the LEAPS marked to market. A run of good months on the shorts can quietly hide a long call that has lost more than they made.
Where does it break even?	The header break-even, which is solved on the same curve the P/L profile draws — so on a multi-expiry structure like this the number and the chart agree. With realized folds in every short premium already banked, which on a PMCC six months in is a large adjustment.
What does the payoff actually look like?	Tick P/L Profile. Dashed is today, solid is at the short call's expiry with the LEAPS still carrying its remaining time value — which is what makes it useful here. The flat top past the short strike is your cap; the gap between the lines at the current price is the theta you are collecting.
How much capital is it really using?	Capital. Under Reg-T the long call covers the short and the pair is charged the net debit deployed — so the figure reflects the whole point of the strategy rather than treating the short as naked.
Is the short about to be taken?	A pink row for assignment risk: short leg ITM with almost no time value left. On a PMCC that is your cue to roll, especially ahead of an ex-dividend date.

If the short call is assigned

Expire on an ITM short call records the shares being sold at the strike — which is exactly what assignment does, and leaves you short 100 shares against your long call. From there, record whichever way you resolve it:

Buy the shares back — one stock Buy trade, and the LEAPS carries on untouched.
Exercise the LEAPS — a stock Buy of 100 shares at the long strike, plus a closing trade on the long call at $0. Note this throws away the LEAPS's remaining time value, which is usually why rolling the short beforehand was the better trade.

Rolling the LEAPS

Two trades in the same campaign: sell the old long call at its mark, buy the new one. The realized P/L on the old leg lands where it belongs — inside the campaign's total, so the cost of maintaining the structure stays visible rather than disappearing into a new campaign with a clean slate.

PMCP, the mirror

The same construction on the put side: a deep ITM long-dated put standing in for short stock, with short puts sold against it. Strategy type PMCP; everything on this page applies with the signs reversed.

Coming from covered calls? The Wheel guide covers the share-based version of the same income shape.