So, you want to grow a small portfolio.

You want to do covered calls without

having all the capital to actually buy

100 shares. On this video, we're going

to be covering the poor man's covered

call. This is the number one strategy

that I have experienced myself to grow

my own portfolio when I had a smaller

portfolio, and I still use this strategy

to today. So, we're going to be doing a

step-by-step analysis with real examples

on how you can implement this strategy

as well. So, here's what a poor man's

covered call looks like. So, if you

don't have a big portfolio and you want

to generate income selling covered calls

without having to own 100 shares, man,

you are in store for the best video on

YouTube. Look, here's what a poor man's

covered call looks like. This is the

profit and loss chart. Essentially, it's

very similar to a regular covered call,

except here you have a bigger kind of

premium upfront that you collect for the

capital that you are using, okay? So,

let me explain. So, I've been able to

actually make multiple six figures with

covered calls and premium income. So,

I've been able to make multiple six

figures with covered calls in my own

career building my portfolio to multi

seven figures, and I've collected tens

of thousands of dollars on a monthly

basis. However, here's the big problem.

I have a big account, and not everyone

has the same amount of capital, right?

So, a lot of people tell me, "Henry,

you're only really making tens of

thousands of dollars per month because

you have a big portfolio, but I don't

have one. So, what do I do?" We got the

solution for that. If you don't have

enough capital, most beginners can still

do covered calls by replacing 100 shares

with a leap option. And that's

essentially what a poor man's covered

call is. So, look, most beginners, they

think you need $10,000 or even more tied

up to do covered calls. That's simply

not the truth. You can actually do

covered calls without having to have

tens of thousands of dollars tied up. A

small account can feel really locked in

when they have a regular covered call

because they're using a majority of

their capital, they can't diversify, and

they're only going to be in one or two

positions because maybe their entire

portfolio is 20 or $30,000. Can't do a

whole lot with that. So, instead, you

don't have to have $10,000 plus in one

single stock. Many small accounts can

feel locked out, but what if you didn't

really need that much? News flash, you

don't. There is a version that runs the

same trade for less capital. It's called

the poor man's covered call. Now, this

strategy, it's not risk-free, it's not

free money. There's some risk. In fact,

the poor man's covered call is slightly

more riskier than a regular covered

call, but if you manage it correctly,

then you can actually do very well and

not have too much volatility in your

portfolio. I'll show you what that looks

like. So, here's the first example here.

I'm going to show you this example of a

trade that I didn't open yet. I'm going

to show you an example of a trade that I

actually do already have open on

Palantir. So, let's do this. Okay, I'm

going to zoom in here, and we're going

to go over scenario one, which is a

regular covered call. How expensive it

really is, right? To do a regular

covered call, you need $13,200

in cash for Palantir, right? If it's

around $100 per share, $129 per share.

This is just an example, by the way. You

can run the poor man's covered call

strategy. After you finish this video,

you can learn everything step-by-step

and apply it to any other stock, right?

If you're watching this in the future,

this will still be applicable in terms

of the mindset and the teaching that you

learn from this. Okay, so here, $13,200

is the cash that you would need

available to do a regular covered call

on Palantir because step number one of a

regular covered call is having the

shares, right? So, you can see here, you

have to have shares, 100 shares, and

then essentially it's going to cost

$13,000, right? Now, the PMCC version

runs a little different. It runs a lot

more attractive because you don't have

to put up the same amount of massive

capital. In fact, the difference is

pretty shocking. Instead of putting up

$13,000,

you can only do $2,000. Now, how does

this work, and why is it so much less?

Okay. First of all, here we can see,

this is Palantir, right? Same stock,

same price, okay? This is the same price

in the same stock. However, what's going

on here is you are buying to open a leap

call option, okay? You can see here,

okay? It is a one call option. I'm going

to zoom in here even more, okay? If you

buy a 10 call option, here you can see

in this example, I'm going for August

1st. This is a short-term poor man's

covered call. Okay, I'm going to show

you different variations of the poor

man's covered call because expiration

dates matters a lot, okay? But for now,

we're just trying to understand how does

it work in terms of the basic and the

foundation. The foundation is you have

one call option that is deep in the

money, okay? That is the whole point of

a poor man's covered call is you have to

replace shares, okay? We have 100

shares, which is very expensive. Now, we

need to replace that with something

that's very similar, okay? It has to

look similar, has to feel similar, okay?

And that's where the deep in the money

really comes into play. So, what is deep

in the money? Deep in the money is

essentially when an option is already in

the money, but it's in the money by a

good amount. It's in the money by tens

of dollars potentially, right? Or

whatever in the money amount it has to

be a higher delta such as 70 delta or

above, okay? So, of course, for a cheap

stock, it might only be a couple dollars

in the money, but for something like

Palantir, which is in the $130 range,

it's going to be tens of dollars. In

this example, it is one Okay, so it's

$22 in the money. This option here

expires in August, and this option that

we're selling also expires in August.

This is actually really close in terms

of date. This is something that I don't

usually do, but can also be very useful

if you have a shorter-term one-month bet

on a stock going up. Because again, the

poor man's covered call is a bullish

strategy, okay? We'll go over that a

little bit later on how to actually

manage the strategy and close it

successfully, but here you can see in

the money, deep in the money 110, and

then let me actually clear these

drawings. And then the 150 is the strike

price for the call option that you sell,

which is your covered call. And

essentially, this is going to be very

similar to a regular covered call except

it is a poor man's covered call because

you are using a call option as a

purchase instead of 100 shares. You can

see here that it's pretty cheap to buy a

call option versus buying 100 shares.

100 shares 13K and buying a call option

costs $2,500.

So, why is this estimated amount only

$2,100? The reason why this is actually

even less than the amount that you buy

the first call option for is cuz this

amount actually goes down by the amount

of money that you collect when you sell

the covered call. So, whenever you enter

this trade as one order, for example,

and you enter it, you are going to

reduce your upfront cost. It's going to

be a lot cheaper in terms of the call

option that you buy because you are

collecting income here on the call

option that you sell. Okay? So, that's

actually why there is an estimated

amount here of $2,100, which is way more

capital efficient. And to be exact, it

is 85%

more capital efficient. There's an 85%

discount and it's almost the same exact

trade. It's pretty much identical.

There's a little bit of a difference in

terms of when you own 100 shares, you

actually own it no matter what, and the

call option that you buy, if the stock

ends up crashing down significantly

below 110 in our example, then you could

end up losing all the premium that you

paid here. So, there is a risk and

that's why I said the poor man's covered

call can be more risky than covered

calls. But if you manage it correctly,

as I'll show you, it shouldn't be too

much of an issue, especially if you have

correct position sizing. If you only

use, even if you have a small portfolio,

you'd still want to have multiple

different positions in your account,

right? So, maybe that's Palantir. Maybe

that's maybe that's Nvidia. And I'll go

over some of those examples a little bit

later. But you can see how here it's

almost the same trade, but there's two

different price tags. Literally, guys,

there's two different price tags. If you

appreciate me showing you this strategy,

if you didn't know this strategy before,

please go ahead and subscribe because

there's going to be a lot more teachings

on this YouTube channel to help you

build to the next level with your

options trading. Look, here you can see

that there's two different price tags,

huge difference, okay? 100 shares of

Palantir versus a deep in the money leap

with a subsidy in terms of the covered

call that you sell. So, this is called

the PMCC or poor man's covered call

strategy. So, let's start off with this

one idea that makes the whole thing

work. We have this is a big idea. You

don't need 100 shares as I just showed

you. You can just buy a leap call option

that behaves similar and looks similar

to 100 shares to greatly reduce your

upfront cost. So, you buy a leap option

and for me that's typically 9 to 12

months, okay? The whole reason I do this

is because a covered call, you want it

to be a little bit longer term. You can

do one in the short term as well like I

just showed you. If we scroll back up

here, you'll see that this is a shorter

term poor man's covered call where one

option is expiring in August covered

call expires a little bit sooner, okay?

So, once this expires a little bit

sooner, then you basically have a

choice. You can either sell this long

call option that you bought or you can

sell another covered call against the

leap option, but there's not whole lot

of time left. So, this is a short-term

trade that essentially when this option

expires, you have a choice either close

out for a profit or to continue on for

one more week, but actually what I

personally do is I typically go out a

lot longer in terms of date. So, I

typically go out for 9 months or 1 year.

Now, let me show you actually an example

on my phone with a position I currently

have open. All right, so let's look at a

position I currently have open on

Palantir. So, I have 2,600 shares of

Palantir and I really love this stock,

but I actually also have a leap call

option, okay? You can see here in the

bottom the 120 call option. I'm going to

click into this. This is a leap call

option that I recently purchased and I

don't have a covered call against this

position, okay? You can see here if I

scroll down, I had recently bought this

position, okay? And I'm up $610. This is

really interesting because with the poor

man's covered call, you don't have to

open up in one trade. So, for example,

you can buy it in one trade, right? Or

you can do the long call option and if

it increases in value, you can later on

decide to turn a leap option into a poor

man's covered call. By the way, on the

screen right here, I made a full 1 hour

and 30 minute guide on leap options step

by step. I'm going to have that for you

in the description or at the end of this

video. So, make sure that you finish

this video and then you can watch more

about leap options. It's very helpful.

But, let's continue on here. So, the

total return here is $610. And now, I

want to do a covered call sell versus

this LEAP option, okay? So, I decided

that, "Hey, the stock's up a little bit.

Now, I want to start generating income.

Now, my goal is more income because the

stock is up a little bit. It has done

what I thought it was going to do, which

is have a significant increase." And I

basically called Palantir at $109 per

share a few videos ago, a couple weeks

ago. And essentially, I told my Discord

community I'm very bullish on Palantir.

The move had already happened. So, now I

think Palantir is more fairly valued. I

still think it can go to $30 per share.

So, I'm going to look at selling a 150

covered call to make my poor man's

covered call. So, I'm going to go to

trade, then view all options. Now,

because I already have a long call

option, all I need to do now is sell a

call option. Let's go back here. Let's

just remind ourselves what expiration

date we have here. The expiration date

is March 19, 2027. This essentially is a

replacement of shares because if I

scroll down here, you can see the delta

is .69, which is essentially .7 delta,

okay? So, .7 is my sweet spot. That's

where I like to have a LEAP option.

That's where I like to have the

foundation because a .7 is a very high

delta. So, a high delta is going to be

also deep in the money by definition

because anything deep in the money is 50

delta or higher, right? Because when a

stock is trading for exactly what the

strike price is at, it's about 50/50

chance, right? And the more in the money

it is, the higher the delta, okay? So,

I'll show you a graph of that a little

bit later, but look, .69 delta, cool.

This is exactly what I'm looking for,

okay? And now, I'm going to go to trade,

view all options, and I'm going to sell

something like a shorter-term call

option. So, we're essentially in July

right now. So, if I look at a monthly

kind of income figure, and I was going

for more monthly, which I do all the

time, I would look at something like

August 21st expiration. So, here I can

go up to, you know what? It would be a

little bit unnecessary just because my

price target for Palantir is 150 to $160

per share in the next three to six

months something like that but in the

next one month I don't think it's going

to be 150 so I can be a bit more

conservative and go for more income

because you see if I go for 140 versus

150 the amount of premium that I would

collect would be 850 dollars versus the

150 strike I would only collect 550

dollars that's because there's a higher

chance for the 140 to be in the money so

there's higher risk and because there's

higher risk of course I'm going to be

collecting more premium because I get

paid for a higher risk that I take so

right here the 140 if I were to go ahead

and sell this then I would collect 850

dollars now let me show you how I would

do it in one transaction versus two

transactions because this already have a

leap call option open now I'm just

selling and making 850 in terms of

premium on the position I already have

but let me actually show you what I

could do if I wanted to open up a

position from scratch and let's actually

go step by step from the very very

beginning all right this position I want

to show you is going to be on Nvidia I'm

going to actually do some technical

analysis on Nvidia and show you what

strike prices I pick for doing the poor

man's covered call so what I'm going to

do is I'm going to go to go to the

charting feature here of Yahoo Finance

feel free to use your really anything

else I'm just going to show you the

technicals that I look for so look this

black line right here is essentially

called a Bollinger Band I love using

Bollinger Bands and I've been teaching

Bollinger Bands for the last six years

in my community this has been a complete

game changer in the results that my

students have gotten and here a

Bollinger Band is basically telling us

what range the stock is likely to trade

with it so check this out I just

currently trading for 195 dollars per

share it's right at the bottom of the

Bollinger Band which is 190 the top of

the Bollinger Band is 214 Nvidia's

trading in a pretty tight range it looks

like it's pretty fairly valued but I do

think that it is worth 210 dollars per

share that's not a massive upside and

this point of the video is not to do

stock picking but I'm just telling you

based off of my view I think that it has

15 more dollars of upside therefore a

poor man's covered call is going to make

sense because it is a bullish strategy

okay and we don't have to have a huge

amount of growth in the stock itself to

realize a huge amount of growth in the

poor man's covered call strategy because

it's already pretty leverage strategy.

So, let's go ahead and open up this

trade keeping in mind that at 195, we

like it. So, we're going to be

purchasing a call option and then we're

going to be selling a covered call at a

210 strike price because that's

essentially where we see the top of

Nvidia. So, now I'm going to show you

how to open it and I'm also going to

show you how to manage this trade. All

right, so here is at $194 per share. I'm

going to go to trade options and now I'm

going to build the first step of the

leap strategy before I do the covered

call and I'm going to buy a call option.

I'm just scrolling here to an expiration

date. I'm going to go for March 2027,

okay? I'm going to go to call buy call.

Now, March is a little bit less than a

year, but that's okay again. As you can

see here going back to my presentation,

you want to buy a leap option with a

long dated time frame of 9 months up to

1 year. So, 9 months is okay. So, keep

in mind as I open up this trade, the

whole point is deep in the money, right?

So, strike price will be set far below

the stock price, okay? So, the stock

price is 195. We're going to go under

that for the leap call option and we're

going to go for a deep in the money. So,

we're going to go for a delta of 0.7 or

higher. That way our leap option will

move 80 cents or 90 cents for every $1

move in the stock and I like them

because they control 100 shares and it's

way less capital. So, again, that is the

whole goal here, right? We are trying to

do less capital so we can be more

efficient even if we have a smaller

portfolio because we all want to grow,

right? No matter how much money we have

whether it's smaller 20K or 30K or

whether we have six figures and we want

to get to seven figures, it's still

valuable to use the poor man's covered

call strategy. So, here's what I'm going

to be looking at. The key is this

strategy is buying deep in the money or

in the money ITM call leaps, okay? The

more in the money this price is as an

example on Apple, then the more

expensive and deeper in the money it is

and then the farther away is the strike

price that's going to be out of the

money is going to be a lot cheaper,

okay? So, going back here into the phone

screen, let's go for March 19, okay? I'm

going to go for a buy call option that's

going to be in the money. I'm going to

look at 175. If I scan this right here,

you can see there's a delta of .71. So,

71 delta, that's pretty good, right?

Now, the bid ask spread here is actually

pretty nice as well. So, you can notice

the bid is $40.70 and the ask is $41.25.

It is pretty decent, okay? The wider

this is, the worse because a lot of you

guys think that Robinhood is free, but

it's not. You can lose tons of money if

you continue to trade and day trade and

be very active in trading and the bid

ask is very wide, you are essentially

losing money. Your money is just

slipping away from you, okay? It's just

kind of going into the thin air and it's

going to Robinhood's pocket because the

bid ask spread. Every time you're

trading, you are losing some money,

right? Essentially, that's how it works,

okay? So, here, if I want to buy Nvidia

25 call, I will click buy, right?

Actually, excuse me. I showed you this

option. We all only have to do is click

this plus icon on Robinhood or whatever

brokerage you're using, you add this.

So, you would buy to open, okay? BTO on

some brokerages. And now, we have our

base. We have our 175 call here. It's 71

delta, great. And it's worth $4,100

in terms of premium. That first option

we have to spend money on, we have to

pay it, right? So, let's go to sell call

option. Now, we're going to sell a

shorter-term call option. And hey, let's

say we want to make some monthly income

on this position, okay? Great. So, in

the next month, okay, will Nvidia go to

210? I think it can go to 210 within two

to three months. So, on a monthly basis,

I can go a little bit lower, say to 205,

right? If you want to be more

conservative, by the way, and you think

the stock is going to be more bullish,

go for 210. If you just want more income

focused and you want to generate income

without really as much capital growth,

hey, you can even go for 200 here,

right? You can even go for 195. That's

fine, too. Let's go for 205, okay? Let's

keep it here in the middle, okay? So,

the 205 here, the premium is $725. So,

let me open this up right here. And now,

you can see the payoff chart, okay? The

payoff chart of how this option looks

like. Now, it's a little bit small here

and it's zoomed in on on the Robinhood

app. I mean, you can see there's kind of

long tails here, but I don't know why

they did it like this because the long

tails are very long. You can see how it

goes up to $500, okay? But essentially,

we're going to I'll kind of toggle here

to make it as easy as possible for you.

Look, although this is a really wide

image, the truth is that if Nvidia goes

to its the price that we sell at, which

is 205, we can realize the max profit

here of around

to lose money as the stock gains value,

our options in the money and it starts

to lose value against us, but very

slowly. You can see how this is going

down very slowly. Now, here's the most

easiest thing to do. As soon as it hits

205, just close out the trade for a

profit. That's it. If it goes to you're

out, and you're going to make a lot more

on the 175 call option that you

purchased because it has a higher delta,

and the 205 call option that you sold

has a low delta. So, it's going to lose

some money, but you're going to gain so

much more in the 175. Just close out for

a profit, right? So, again, your profit

here would be roughly 1,100 if Nvidia

went up to $205 per share. Just get out

of this trade at that point. Now, again,

if I were to execute this trade, let's

say I wanted to do one contract here,

you can see the total estimated cost is

$3,300. The total gain on this trade is

a potential $1,100. So, you could do the

return to yourself here. You can see the

math how it works out. $1,100 is your

max profit at 205. You just close out

the trade. And the amount of money that

you're putting up to open this trade is

$3,300. So, you can see that as a

percentage potential return on the

screen if everything goes according to

plan. Let's talk about some scenarios of

what could happen with this trade. All

right, so we kind of see the potential

there. But what could potentially happen

with the trade? Let's build a little bit

more foundation, and then we'll kind of

get back to that Nvidia poor man's

covered call, and we'll talk more about

managing the trade in different

scenarios, okay? So, here we'll go back

again to deep in the money means that

there's a delta of 0.75. That's why you

saw me do a 0.71 the definitions, okay?

So, if you have a 70 delta, there's a

chance the stock stays above that strike

price. But the second version of delta

is how much the option moves when the

stock moves. So, if there's a delta 70

and the stock moves by a dollar, the

option is going to move by 70 cents.

Okay? So, here you can see a 0.7 delta

70 chance of assignment. So, that's

essentially how delta works. So, the 175

call option I purchased on Nvidia

becomes the stand-in. Okay? It's

basically like the foundation to replace

the 100 shares of having to have 100

shares on a regular covered call. So,

you sell short-term covered calls. So,

you saw that I was doing in August 21st

because I was targeting monthly income

premium collected. Okay? So, I sell a

covered call against the LEAP option.

Same income engine, but a fraction of

the capital. So, I hope that you're

smiling right now. I hope that you're

enjoying because it really is one of the

most powerful strategies that you can

really learn in option trading. So,

again, what a poor man covered call is

in simple terms, a PMCC is a diagonal

call spread. Okay? Where you buy one

in-the-money LEAP call, and then you

sell a shorter-term out-of-the-money

call option. So, again, profit loss is

you have upside, and then here this

diagram actually needs a little bit of a

skew. You start to lose money very

slowly as it goes into the money, but

that's completely okay because as soon

as it hits, for example, in Nvidia's

case, 205, right? So, this would be the

205 level. Okay? Like we said, 205 was

the short call strike. As soon as it

hits 205 here, you are out. You are

printing, and then you're out. You close

out the trade for a profit because if it

continues to go up, you don't have any

benefit. You're just losing money,

right? And as soon as you get out of the

trade because the long call option is

more sensitive and it has more time,

it's not going to be affected too much

if you hold it. So, you just close out

for a gain, right? The only time you

lose again is if the stock ends up

coming down. And this is also going to

look like this, right? It's going to

look something like this where you could

end up losing all the money that you pay

if it goes out of the money. So, if we

go back to Nvidia's case, if it was $175

or lower, you're going to be losing all

your money. But, this is where it's very

important to manage your risk. And if it

goes even to 180, I would simply cut the

position, and we'll talk about that in

just a moment. I want to go over again a

bit more of solidifying the basics. So,

if you perfect the basics, you can build

up a lot. But, if you have a shaky

foundation, I don't want to teach you

all the advanced stuff because I need

you to be self-sufficient, right? That's

my goal of my program, by the way, is

when someone joins, my goal is not to be

with them forever. My goal is to teach

them everything I know, help them learn

how to fish for themselves, and then

they become self-sufficient. And then

it's better for both of us because now

they're like a bird, they can spread

their wings and they can fly away and

I'm just like, "There you go. Go to your

retirement, your income goals. Perfect.

I'm happy and the student's happy as

well." So, that's my goal of my program.

That's what I've been able to do for

past 6 years. So, by the way, if you are

interested in that, you can check out

the top link in the description. I'd

love to help you in your journey,

whether you have a small portfolio or

not. I've helped many individuals. I've

helped people struggling in very

difficult situations where they lost

their job. I've helped tons of

successful engineers as well implement a

poor man's covered call strategy where

they're growing through their base of

six figures and they want to get some

multiple six figures and beyond. So,

wherever you are in your journey,

whether you have a small portfolio or

whether you have a bigger portfolio,

there's many strategies that I teach on

YouTube and there's some strategies I

don't teach on YouTube that I can help

you learn for your own portfolio. So,

again, love to have you. All right,

guys, let's go back to Nvidia right now.

Let's talk about the different scenarios

that can happen cuz now we have a very

strong foundation. Now, we can

understand how to manage the strategy.

So, look, when you open up the trade at

first, you just open it up and you wait,

okay? You don't really want to get to

expiration because, of course, there's a

LEAP option, which is very long-term,

and there's a call option that's much

shorter-term. You have to manage the

strategy in some way, right? So, yeah,

if we have a 205 covered call that we

sold against our LEAP option that was at

175, as soon as it hits 205, we can get

out of this trade. That is the simplest

way to manage this trade because, look

here, as you can see in my presentation,

the poor man's covered call max profit

happens at basically the strike price

where you sell the covered call at,

okay? So, here we reach that price here,

right? And then we don't want to do

anything else. We just want to get out

of the trade. So, again, here at 205,

with the premium that we collect, it is

going to go against us, okay? It's going

to go against us. This 725 is going to

cost more. However, the call option that

we purchased, we go back to buy call

here, and I go back to the March, this

is going to gain so much more value. So,

it's going for $41. The other one is

going for $7 and something change,

right? If Nvidia goes up by $20,

essentially, this is going to gain $20

times the delta of .7. So, it's going to

gain $14, right? And then, the short

call option is going to lose $3, right?

So, again, we're going to have a net

gain of roughly $11, okay? And on the

premium that we put up of 33, again, the

math is extremely attractive. And that's

because the sensitivity of the deep in

the money leap option gains value so

much quicker than the short call option

that you sold. So, if it hits 205, by

definition, there is no way that 205

lost more in value than the long leap

option gained in value. So, at 205,

that's essentially the easiest form of

exit. 205, I'm out. I'm taking profit on

this trade. So, as you can see, once you

hit 205, you might want to consider

closing out the short call if it gets

too close as well. So, at 205, you're

definitely out. At 204, maybe here, 203,

202, you can also close out for a gain,

right? If you experience a gain that

you're happy with, so for me, on a poor

man's covered call, because there is so

much lower capital that you're putting

up, again, our max profit is $1,100 on

$3,300 per share total cost. So, if I'm

up half of that, $600, and I put up

$3,300, that's essentially like a 1/5,

right? That's essentially a 20% gain.

I'm happy around 20%. So, if I can make

20%, and I experience that within 7 to

14 days, I'll be out of the trade. I'll

take profit on the trade. Now, ideally,

if it is moving in your direction, it

can feel nice to take profit, but it

doesn't really make sense to just be

taking profit all the time too early as

well, because yes, there is an exit

point where you could feel great, "Hey,

I made some money, but it would be

better just to hit your exit point,

right? So, if you're right on the thesis

of the stock, so for me, Nvidia is going

to 210 per share next couple of months,

then I'm just going to hold until 210.

Now, one of the things that can happen

is at August 21st, we sold a 205 covered

call, and let's say that Nvidia goes to

201 per share. It's not at 205. Great.

So, the leap option gained value, and

the short call option is actually lost

value. Now, August 21st, it expires

worthless. It's out of the money, it

expires worthless. At that point, you

can sell another covered call for the

following month, right? For September or

October, November. You can continue on

the strategy month by month. And if your

leap call is in the money, it's moving

in the right direction, the stock is

going up, but it doesn't breach your

covered call strike price, great. That's

actually the ideal situation where the

leap option's getting value, and the

covered call continues to expire

worthless, and you continue to basically

collect income, generate premium, and it

expires worthless, and you just continue

to do it all over again, right? So,

that's pretty much the perfect situation

that you want to be in. And by the way,

you definitely don't want to get

assigned on the sell call, so that's why

I say, once it hits 205, if it does so

before expiration, just get out. Get out

because you don't want to be in a

situation where it's above the covered

call, and all of a sudden now, there

could be

a small amount, but definitely some

risk. There could definitely be some

risk that the broker does something

funny, and they try to exercise, or you

get assigned, or something like that.

You don't want to be in that situation,

and I've never really been in that

situation, but it can happen if the

delta becomes very high. So, if the

covered call is in the money by a lot,

then you could be in that type of

situation where the broker might

honestly just close out the entire

position for you, which is also not too

bad, but you would ideally want to do it

yourself. So, scenario three is if the

stock starts going down a lot, right? If

it goes down a little, that's fine.

That's okay, right? So, if Nvidia goes

from 195 to 185, which would be a pretty

decent crash, that would be a pretty big

risk, you're still in the money on the

long call option that you purchased.

That leap call option would be down in

value. The covered call that you sold

would gain value. You can essentially

sell another covered call. You're going

to have a tough time getting the same

amount of premium. So, now you might

have to go for a 200 covered call

instead of a 205. So, you want to kind

of come down a little bit. That's

because if you're out of the money more

and you're farther away, it's going to

be less premium, right? So, if the stock

goes down, that's okay, but you want to

sell covered calls a little bit lower so

you can still collect income here and

generate something instead of just

having to wait for that leap option to

recover. is the worst situation of all

is if the stock is down. And again,

there's no perfect strategy. Every

strategy has pros and cons, and the con

of a poor man's covered call is it's a

bullish strategy. So, when the stock

market is down and the stock that you're

doing the poor man's covered call on is

down, then the position's going to be

down. So, you do want to consider that.

And if the stock starts crashing, okay,

and you determine that your thesis is

wrong, you can also just close the

trade. Let's talk a little bit about

picking expiration strike price. So, I

always like to go for 0.7 delta. You

already know that. With a strike of 9

months, 12 months, something like that

in that price and time frame. And then

for the short call, I like to go for 30

delta, which is traditionally what I do

for covered calls. So, that's why this

is a poor man's covered call. There's

not a whole lot of difference. It's

still the 30 delta and 30 days until

expiration, okay? I get so really

excited because it's so great to help

everyone. It's so great to help smaller

portfolios as well. I have a recent

woman that I was helping who was a

single mom, and she was having so much

difficulty with the covered call

strategy. She has a 27,000 or portfolio.

And we'll call her Mary. And I was like,

Mary, we're going to have to go with the

poor man's covered call. And this is a

little bit new for her. And once we had

just one session, we opened up a few

positions that went really well. It was

just so game-changing. It was just so

nice to see the results that she

achieved. And I was happy for her

because it's just like a covered call,

like the richer clients do who have six

figures, but someone with 27K portfolio

runs pretty much the same stock. So,

that's amazing, right? So, So remember

this, the more deeper in the money you

go, the better in terms of the

sensitivity. It will be more expensive

as well, but again, poor man's covered

call is not too expensive. So, that's

the good part. Now, the trade-off is a

deeper in the money costs more, like I

just said, and deeper in the money

tracks closer, which is a huge benefit.

And deeper in the money is actually

safer because again, the biggest risk is

the stock comes crashing down, you're

out of money, lose everything that you

pay for if you hold until expiration.

You wouldn't do that a LEAP call option,

right? If you have 1 year to go, you

want to essentially sell premium every

single month, and then at the 6-month

mark, you say, "Hey, for 6 months, I

have collected X amount of premium. I'm

happy with this. My LEAP option either

gone up in value, or hey, it stayed the

same, which is fine cuz I collected 6

months' worth of premiums along the way.

So, I'm going to get out of this

position before the LEAP option goes

against me, before theta fully starts to

kick in." So, a in the money is going to

be safer because in the money has more

sensitivity, and also that time, because

there's a lot of time, 1 year, theta's

going to be very low. The decay of that

option is very low. So, you want to be

in that situation. So again, remember,

you're not hunting for the cheapest

LEAPs, okay? Some people are looking for

what's the cheapest, what's the highest

return that I can get. And that is a

risky way, a gambler's way of looking at

it that I don't personally like. So, in

terms of the cheapest LEAP options,

don't look at what's cheapest. Look for

what fundamentally the stock is the

cheapest. And then if the LEAP option's

expensive, that's fine. You want to pay

for value. You don't want to pay for

cheap BS, right? So, you're looking for

that more optimized scenarios. Now, the

biggest mistakes that you can do with

the poor man's covered call is again,

chasing big premium. So again, selling

covered calls are just huge in terms of

premium, but again, they're there for a

reason. If there's too much premium,

likely the stock is too volatile, so the

IV is too high. You're chasing some, I

don't know, like SMCI or Riot or

whatever, some of these crypto plays.

You're just chasing something with high

volatility. Go for quality. Just go for

quality, okay? I've been doing quality

for the past 11 years in my own

portfolio, 6 years for the students that

I'm coaching, and great results. I go

for quality, not chasing rabbits, but

being more like that turtle, right? But

with this strategy, because this

strategy is like poor man's covered call

on steroids, right? You're building a

bicep over tricep on steroids. You're

getting those big gains. You could be

like a steroid turtle, okay? You could

be like Mr. Big Tortoise, okay? Be Mr.

Big Tortoise. That's the analogy that I

came up with right now. Be a big

tortoise, okay? Don't be the fast rabbit

who's chasing and then, boom, you get

caught by a trap or something, right?

So, don't go for a strike that's too

low, right? You want to just be

optimized. Go for 70 delta on the leap

and something like 30 delta on the

covered call. So, the second mistake,

which is I think should be pretty

obvious and the biggest kind of benefit

of my own community is that I'm picking

stocks based off my own research, what I

believe in, and I do a lot of heavy

research before I do any strategy. The

strategy doesn't matter. It's always the

stock selection, right? That's the most

important part. And here, if you pick

the wrong stock, man, it doesn't matter

how good you are at the strategy. If the

stock goes down, you're losing money

because this is a bullish strategy,

okay? So, that's one of the biggest

benefits of being part of my Discord

community is I have a list of stocks

that I like and price targets that I see

those stocks going to. So, pick the

wrong stock, you are in trouble. You

have made a big mistake. Stick to,

ideally, some of these bigger stocks,

right? Google is great. Tesla, Meta has

sold off a lot recently. Like we did

example in this video, Invideo's also

good. Also, mistake number three is

never really sell below cost basis. This

isn't the situation that you don't

really want to be in, right? You want to

be above, of course, as much as you can

control that. And a lot of that is

through the Bollinger Band, which I

showed you in the technical analysis

portion. If you can find good support

levels, then you can be in a much better

situation running the strategy. So, who

is this for? Again, this is for small

accounts comfortable with option

leverage. Even slightly bigger

portfolios can use this for better

leverage and capital efficiency with

slightly increased variables and risk.

So, if you have a bigger portfolio, I'd

also encourage you to check out the

description for my coaching program

because even big portfolios could

utilize the poor man's covered call

strategy in a little bit more of a

nuanced way, okay? Can use different

stocks, and you can also do a little bit

different of a delta to still get a good

return without having to take on some of

the higher risk that a smaller portfolio

would have to take. But, I would say

that both small portfolios and big

portfolios, the poor man's covered call

strategy is really a good tool to have

in your tool set. If you enjoyed this

video, I'd love for you to subscribe.

It's free, helps me out a lot, and I'll

make more videos just like this one.