The poor man’s covered call is a great alternative to covered call because it uses less buying power. In a tastybites account, it is essential to efficiently use buying power.
A poor man's covered call utilizes a further out in time deep in the money call option as a replacement for long stock, while the short call remains the same as in a regular covered call.
Here are key components of a poor man's covered call:
The buying power reduction of a poor man’s covered call is 84% less than a standard covered call, but the tradeoff is less theta decay and roughly 12% lower max profit.
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