Poor Man's Covered Call

A poor man's covered call is an innovative capital-efficient strategy that replicates traditional covered call income generation using long-term call options instead of stock ownership, making it accessible to traders with limited capital while maintaining similar risk-reward characteristics. This sophisticated approach involves purchasing long-term call options (LEAPS) as a stock substitute and selling shorter-term call options against the position, creating income generation with significantly reduced capital requirements compared to owning 100 shares of stock. The strategy is particularly effective for expensive stocks where full position ownership requires substantial capital investment, allowing traders to achieve similar exposure and income potential with a fraction of the capital. Professional traders use poor man's covered calls to optimize capital allocation across multiple positions while maintaining income generation capabilities and bullish exposure to quality underlying assets. The long-term call provides the delta exposure similar to stock ownership while the short-term call generates regular income through premium collection, creating a position that benefits from time decay and moderate price appreciation. Risk management involves selecting appropriate expiration dates and strike prices to optimize the risk-reward profile while maintaining adequate time value in the long-term option

If NIFTY is at ₹25,800, set up: Buy 6-month ₹25,800 Call for ₹280, Sell monthly ₹26,200 Call for ₹70, creating net debit of ₹210 compared to ₹25,800 for stock ownership, with similar income generation potential and bullish exposure while requiring 99% less capital.