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BCI PODCAST 29. How to Structure a Poor Man’s Covered Call Trade

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The Poor man’s Covered call strategy is much more than “covered call writing, but cheaper” The are a multitude of moving parts that must be mastered to be successful. This podcast will focus in on how to set up the initial PMCC trade based on a specific formula and how to use the BCI PMCC Calculator to assist with enhancing the success of our trades.

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About Alan Ellman

Alan Ellman loves options trading so much he has written four top selling books on the topic of selling covered calls, one about put-selling and a sixth book about long-term investing. Alan is a national speaker for The Money Show, The Stock Traders Expo and the American Association of Individual Investors. He also writes financial columns for both US and International publications along with his own award-winning blog.. He is a retired dentist, a personal fitness trainer, successful real estate investor, but he is known mostly for his practical and successful stock option strategies.

2 Responses to “BCI PODCAST 29. How to Structure a Poor Man’s Covered Call Trade”

  1. Sunny November 11, 2020 9:43 am #

    Hi Alan,

    In this video you say that one of the cons using LEAPS as a substitude for the stock is that we must take long term commitment dealing with earnings reports, etc. Why is that? We can use LEAPS for 1 month call trades as we do with traditional covered calls. Some profits will be lost because of LEAPS bid-ask spread, but why 1-2 years commitment must be taken? I often trade PMCC just for 1-2 months. I think PMCC is a great strategy, but it’s better suitable for large cap, low volatility stocks with high liquidity. KO, you use in example, is a perfect candidate for such trades.

    Sunny

    • Alan Ellman November 11, 2020 11:03 am #

      Sunny,

      Excellent point. All traditional strategies can be crafted to meet the trading styles, trading goals and personal risk tolerances of individual investors.

      Just like traditional covered call writing can be altered to become the PMCC strategy or the collar strategy or to portfolio overwriting or to the PCP strategy where we integrate puts, the PMCC strategy can be altered to various time frames other than long-term.

      This video represents an analysis of the traditional approach to the PMCC.

      I also agree that using large-cap, low-volatility, highly liquid securities are the best underlyings to use for the PMCC in all time frames.

      Alan

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