Managing a Poor Man's Covered Call Position

Important Terms to understand before managing a Poor Man’s Covered Call Position (PMCC)

Before diving into how to manage a PMCC, let’s share a few important terms you’ll see throughout this guide:

LEAP (Long-Term Equity Anticipation Security): A long-dated option contract, usually with 9 months or more until expiration, in this case used as a stock substitute in PMCCs.

Short Call Leg: The short-term call option you sell repeatedly for income. It has a nearer expiration (weekly or monthly) and sits out-of-the-money (OTM). This leg generates the income stream in a PMCC.

Long Call Leg: The deep in-the-money (ITM), long-dated call option you buy as a stock surrogate. This is your capital investment, and it provides the core directional exposure to the underlying stock.

Rolling: Replacing an existing option position with a new one – typically done with the short call in PMCCs to extend duration, adjust strike, or avoid assignment.

If these terms sound too complex, feel free to check out our Options Beginner Guide or dive into our detailed What Is a PMCC article to get up to speed.

Managing a Poor Man’s Covered Call (PMCC)

Managing a PMCC centers on the short call leg, with occasional adjustments to the long call leg. The core of PMCC is the ongoing income which comes from your short call. 

Managing the Short Call Leg

This involves monitoring the short-term call you’ve sold. If it's close to expiration or has moved in-the-money (ITM), you may consider rolling it—buying it back and selling a new one with a later date or different strike. You can also roll early if you’ve captured most of the premium to keep the income going. The goal is to generate recurring cash flow while managing risk of assignment.

• Rolling the Short Call: If the short call is in-the-money (ITM) near expiration, rolling it to a later date or higher strike helps avoid assignment and extend upside. Rolling early once they’ve captured most of the short call’s value keeps income flowing.
• Generating Ongoing Income: Continuously sell short calls over the life of the long call. This keeps theta* working in your favor and generating recurring premiums.
• Adjusting Strike for Market Outlook: Roll up if bullish (for more upside), or down if mildly bearish (for more premium). Be cautious, lower strikes limit your future gains and timing the market is also extremely risky.

Adjusting the Long Call Leg

Near expiration, you can consider rolling out to a new LEAP to extend the trade. If you are bearish, roll down to regain stronger price movement (delta*). If you are bullish, roll up to lock in gains while staying invested.

• Roll Out: Near expiration, roll the long call into a new LEAP to continue the strategy. 
• Roll Down or Up: If the stock drops significantly, rolling down restores higher delta but costs more. If the stock rallies hard, rolling up locks in gains while maintaining some exposure.

In summary, managing a PMCC is about keeping the short call working for you and making strategic decisions about the long call over the lifespan of the trade. Many traders may find that once the process is set up, it becomes routine: collect premium, roll, adjust – similar to managing a covered call, but with a bit more attention.




Delta measures how much an option’s price moves when the stock price changes. A delta of 0.5 means the option moves 50 cents for every $1 the stock moves.

Theta measures how much an option loses value as time passes. A theta of –0.05 means the option loses 5 cents in value per day, all else equal.