February 5, 2026

admin
Date Entered: February 5, 2026
Status: Position Open (2 Contracts)

---

Trade Thesis (Why This Exists)

This is a Poor Man’s Covered Call (PMCC) structured as a diagonal spread designed to:

• Capture elevated implied volatility via the short call
• Maintain long-term bullish exposure via a deep ITM LEAP
• Use active management to avoid assignment and gamma risk
• Generate repeatable income while preserving upside optionality

MRVL does not have any major earnings this week, so the setup is intended to sell premium with defined-risk bullish exposure.

---

📋 Trade Summary (Actual Entries)

Long Leg (LEAPS):

• 2× Jan 15, 2027 $50 Call @ $30.55

Short Leg (Income):

• 2× Mar 30, 2026 $90 Call @ $2.40

Net Debit:

• $28.15 per spread
• $6,030 total capital deployed

Break-Even (at entry):

• $80.55

Stock Price at Entry:

• ~$74.21

---

Why the $90 Short Call Was Chosen

• Strike sits above recent trading ranges, reducing assignment risk
• Premium is elevated relative to historical volatility
• Balances:
  • Rent collection (~7.86% vs LEAP cost)
  • Gamma exposure
  • Roll flexibility

Note: This is not a “set and forget” strike—close or roll if MRVL approaches $90 near expiration.

---

📜 The Golden Rules (Non-Negotiable)

• Never let the short call expire ITM
• Close or roll short calls early to avoid assignment
• Monitor Extrinsic Value, not individual leg P/L
• Ignore individual leg P/L: evaluate net liquidation value

---

📈 Profit & Risk Framework

Outcome Scenarios at March Expiration

Scenario	MRVL Price	Result
Strong Rally	$95–$105	LEAPS appreciates; short call likely rolled for credit
Ideal Outcome	<$90	Short call expires worthless; keep full premium
Flat / Modest Up	$74–$88	Income cycle completed; sell next call
Down Move	<$70	LEAPS loses value; shift to repair & income mode

Cycle Income Potential:

• $480 per cycle per 2 contracts
• Repeatable if managed correctly

---

⚡ Why This Works for MRVL Right Now

1. High Rent-to-Strike Yield
   • $2.40 on a $90 strike (~7.86% vs LEAP cost over 53 days)
2. Technical Awareness
   • Resistance near $90–$92
   • Short call allows management before this zone

---

🛠 Post-Expiration / Management Plan

Short Call Decision Matrix

Scenario	Price Zone	Required Action	Objective
IV Crush / Calm	<$85	Buy to close at 60–70% profit	Lock in income, sell next cycle
Do Nothing	$85–$88	Let time decay work	Capture full premium
Gamma Test	$88–$92	Roll $90 → $95–$100	Restore upside runway
Blowout	>$100	Close diagonal package	Preserve LEAP time value
Repair Mode	<$70	Buy back short calls, consider roll LEAP down	Accelerate recovery

---

🛡 LEAPS Repair & Capital Preservation Protocol

1. Aggressive Roll-Down (Primary Repair)
   • Sell $50 LEAPS, buy $45–$48 LEAPS
   • Restores delta, lowers breakeven
2. Income Compression Strategy
   • Sell nearer-dated calls closer to ATM
   • Accept capped upside temporarily

Advanced Only: Ratio repair converts trade to undefined-risk; use with margin awareness.

---

🚦 When to Cut and Walk Away

• 50% Capital Rule: If net position value < ~$14.08 per spread
• Preserve remaining capital; avoid structural panic

---

🔍 Greeks (What Actually Matters)

• Delta (Directional Bias):
  • Long LEAP ≈ 0.79
  • Short call ≈ 0.23
  • Net delta ≈ +1.35 (~135 shares synthetic)
• Theta & Vega:
  • Short call theta offsets LEAP decay
  • LEAP vega gains if IV rises

Gamma Warning: If MRVL trades above $88–$90, short call delta rises quickly. Close or roll early.

---

🧪 Stress Tests

Baseline: MRVL ≈ $74.21

1. Fast Rally: $74 → $90 quickly
   • Short delta rises
   • Roll 90 → 95 or 100 to preserve LEAP upside
2. Slow Grind Lower: $74 → $70–$72
   • Short decays, LEAPS loses delta slowly
   • Let short expire or close ≥60% profit
3. Hard Breakdown: $74 → $60
   • Sell nearer-term calls, consider roll LEAP down
   • Optional: sell closer OTM calls (≥0.25 delta) to recover income

Never roll long LEAPs unless capturing profit or repairing extreme drawdown.

---

🔒 Failure Conditions

• Stock collapses below LEAP strike and stays
• Time falls below ~9 months with no recovery

MRVL is well above the LEAP strike, so structure intact.

---

📌 Net Result Across All Scenarios

Scenario	Outcome
Fast rebound	LEAPS wins, short call managed
Chop / drift	Shorts compound quietly
Selloff	Structure survives, income improves

PMCC works best when rules are followed—less intervention, more consistent results.