🧠 Why I Trade the PMCC This Way
I’m not trying to predict the market.
I’m not trying to time tops or bottoms.
What I am trying to do is simple:
Generate consistent income while staying exposed to upside.
That’s it.
The Poor Man’s Covered Call (PMCC) gives me a clean way to do both:
- The LEAP acts as my stock replacement
- The short call acts as my income engine
Over time, I’ve learned that success with this strategy doesn’t come from being right — it comes from being systematic.
The biggest shift for me was this:
I stopped thinking in trades and started thinking in systems.
I’m not managing individual positions.
I’m running a repeatable income engine.
🧱 The Foundation: The LEAP Never Changes
Every trade starts the same way.
I buy a deep ITM LEAP with:
- ~0.80 delta
- 12–18 months to expiration
This is non-negotiable.
I’m not trying to get cute here. The LEAP is my foundation, and its job is to behave like stock while using less capital.
I typically allocate about 5–15% of my account per position, and I don’t mess with that either.
One key rule:
I don’t “close” good LEAPs — I roll them.
The goal is to keep the system running, not constantly restart it.
🔁 Managing the LEAP (Without Overthinking It)
I don’t babysit my LEAP.
I manage it on a schedule.
- I roll it when it hits 6–9 months to expiration
- Or earlier if:
- Delta drops below 0.70
- I’m sitting on a large gain (30–50%+)
- The underlying has clearly shifted trend
When I roll, I simply:
- Close the old LEAP
- Open a new one (12–18 months, ~0.80 delta)
- Reset the short call system
No emotion. No guessing.
💰 The Real Engine: Selling Calls
This is where the income comes from.
My default setup is simple:
- 20–30 delta
- 14–30 DTE
From there, I just repeat the cycle.
But over time, I realized something important:
👉 Not all market conditions are the same
So I added two filters that changed everything.
🧭 The First Filter: Volatility (VIX)
I use the CBOE Volatility Index (VIX) to decide how aggressive to be.
Here’s how I think about it:
- High VIX (>20)
I get paid more, so I take less risk
→ 15–25 delta, 7–14 DTE - Normal VIX (15–20)
I run my standard system
→ 20–30 delta, 14–30 DTE - Low VIX (<15)
Premium is weaker, so I get selective
→ 25–35 delta or skip - Very Low VIX (<12)
No trade (non-negotiable)
The rule is simple:
If I’m not getting paid, I’m not playing.
📈 The Second Filter: Trend (7 / 21 Moving Average)
This is where I made a big improvement.
I don’t use moving averages to predict anything.
I use them to adjust my aggression.
- Bullish (7 > 21 and price above both)
I back off
→ 15–25 delta
→ Give the trade room to run - Neutral / Chop
I stay consistent
→ 20–30 delta - Bearish (7 < 21)
I lean into income
→ 30–35 delta
The key here is subtlety.
I’m not making huge changes — just small adjustments that compound over time.
🎯 Picking the Right Strike
Once I know my delta, I sanity check the trade:
- Is the strike outside the expected move?
- Do I still have upside room?
- Is the premium actually worth the risk?
If the short call is going to cancel out my LEAP gains…
👉 I know I’m too close.
🔄 Managing the Trade (Where Most People Mess Up)
This is where discipline matters.
I follow two simple systems:
1. Profit Taking
I close short calls at 50–75% profit.
No hesitation. No greed.
Then I reset and do it again.
👉 The LEAP stays in place unless it needs to be rolled.
2. When Price Moves Against Me
I don’t guess — I react based on distance:
- More than 5% away → do nothing
- 3–5% → pay attention
- 1–3% → get ready
- Less than 1% → act
Then I confirm with delta:
- Around 30 → monitor
- Around 40 → act
🎯 What “Acting” Actually Means
When I need to adjust, I have three options:
- Roll up and out (preferred)
- Close early
- Take assignment (only if intentional)
What I don’t do:
- Sit on ITM calls
- Hope for reversals
- Freeze
📅 My Weekly Rhythm
I keep this simple:
- Early week: Enter trades
- Midweek: Monitor
- Late week: Take profits or roll
Then I repeat.
🧠 What This System Really Is
At the end of the day, this isn’t just a PMCC.
It’s a 3-layer system:
- A theta engine (the core strategy)
- A volatility filter (VIX)
- A trend filter (7/21 MA)
I’m not predicting anything.
I’m just adjusting to conditions and executing the same play over and over.
🚫 When I Don’t Trade
I skip trades when:
- VIX <12 (non-negotiable)
- Premium isn’t worth the risk
- The setup feels forced
Because I’ve learned this the hard way:
No trade is always better than a bad trade.
🔁 The System Loop
Every position follows the same process:
- Buy LEAP (~0.80 delta)
- Sell short call
- Manage short call actively
- Roll LEAP when needed
- Repeat
👉 The system continues. The position evolves.
🧠 Final Thought
Most traders fail because they treat every trade like a new decision.
I don’t.
I follow the same process every time.
The edge here isn’t intelligence.
It isn’t prediction.
It’s consistency.
🔥 One Line That Sums It Up
I don’t trade moving averages — I use them to fine-tune my income engine.