How To CORRECTLY Trade The Poor Man's Covered Call (PMCC) | LIVE OPTIONS TRADING (4/14/22)

The Poor Man's Covered Call (PMCC) strategy is a great choice if you're looking to place a trade similar to a regular covered call but for significantly less capital. It's primarily a bullish options trading strategy that provides a longer term investment-like position that also takes advantage of high implied volatility. However, because this strategy only involves options (which have very different pricing structures as with stock), there are some key differences compared to a regular covered call. As a result, if you don't trade the PMCC correctly, you may find yourself losing money! So join me in this video as I carefully walk you through a real-life example of properly placing a PMCC trade on the S&P 500!

🔥 JOIN ME ON SKILLSHARE TOO!!! 🔥
*** Signing up for a Premium Skillshare membership with any of the links provided below will give you a 1 month FREE trial! ***

Chapters:
0:00 Introduction
1:58 SPY Analysis
2:35 PMCC Part 1 (Buying The Long Call)
6:15 PMCC Part 2 (Selling The CORRECT Short Call)
10:35 PMCC Part 3 (Selling The INCORRECT Short Call)
12:53 Closing Remarks

#tradinglessons #pmcc #thinkorswim

[scottreesetradinginvesting]

Hope everything made sense! The PMCC can be a little bit complex, so let me know if you have any questions! :)

[korzenik]

First video that I watched that someone actually placed a Iive trade! Nicely explained! Thanks

[taylor]

My guy! Thanks for that in depth explanation. 80 delta for leap and sell a long call just OTM calculating P/L. Rinse and repeat. Thank you and subscribed!

[DimensionRIFT]

Really good video with clear examples. Thanks!

[Megrogs]

Very insightful video! Do you have a risk management strategy for the long side of your call? For example, if your long call is down 25% or 50%, do you cut losses? What if the stock price even hits the strike price of your long call? Will you close it out and open a new one?

[nurad]

If I get assigned and I do not have the money to buy 100 shares. Can I use the leap option to close the covered call directly without exercising it?

[Oct-jydz]

Did you say covered call is a bullish strategy? Do I get it right? Long 80 delta and short 20 delta? Great video thanks.

[jamesmcfarlane]

This video is great! You are the best at explaining options clearly. I have learned so much from you about trading by watching your videos. In a past video you explained selling shares of stock to cover a short put that is in the money. I'm confused about when exactly you sell the shares? Is it when the share price first dips below your sold strike price? What if the share price is $100 below the strike and shares have not been assigned. I know the option is there to roll to a forward date. Is it too late to sell the shares after that has occured? If you do sell share short at what point would you buy the shares back to close them out? I understand I would receive a credit when I sell the shares short but I'm not sure at what point I would buy them back? Thanks again Scott.

[QuiteDandyAndy]

Excellent video! Informative and presented well.

[Koolhandluke]

Hi Scott thanks for the great videos. Is this the way you do the math for any underlying covered call? This is new to me. Thx

[XxXK]

I want to do this strategy with shopify. I can get 100 shares right now. But there really is no point in putting up that much capital upfront unless i absolutely need to.

I only use robinhood. Is it true that RH will automatically exercise your long call to to cover short call?

[joehealeyphotography]

Scott is my first stop for any strategies. One question. If the strike prices between the long and short are greater than the cost, are you basically protected in the transaction?

[Merritt_Life]

Lots of good tips in this video. Thanks

[victorpistone]

Why not use 1-7 DTE on the short to get more overall premium than the monthly ?

[frankp]

It seems like this process is much easier on other platforms. This can be done as call debit spread in one transaction on fidelity and Robinhood. Therefore it does all the math calculations for you.

[zaklloyd]

Nice video. Thanks.
How would a reversed position be structured for bear market conditions?
I would buy a long term in the money put then a sell a weekly put?
Sorry for the noob question. I have some Bitcoin laying around and want to build it up over the next year. This strategy looks to be a pretty safe bet.

[nationalnotes]

Downside is if the market turns and SPY ends up lower than your initial B/E price of $452 minus the credits received along the way.
Very risky strategy to use in an expensive market like now.

[newbiebyte]

Great videos Scott. I have a qq. Suppose I already own 100 shares of a stock via an assigned CashSecuredPut in the past. Since the Stock has dropped so much it's not worth Selling any Covered Calls at the moment. However currently I want to play the PMCC on the same stock. When I submit a Long Call Buy Order, at a lower Strike then what was assigned of of the CSP in past, do i now control two 100 shares of the same stock at different strikes; or i have one cumulative 200 shares, at an average strike?

[enricosaccheggiani]

Great Scott, great explanation, but I don't think i will do it, it's too complicated and however put 9400 dollars on a position is however too much.
What happens if the stock collapses? I think that you can lose many money
Thanks however for the video

[alanden]

Only issue with this that isn't necessary stated directly is that you would need $36, 000 in capital to exercise the contract. If you didn't have this capital you would need to get this on margin.