HIGH NOON TRADER

Tom King – How I Trade For Income: My New Passive ETF Strategy + PMCC

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Happy Harry Huckleberry
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Strategy Source

Creator/Channel: Tom King – How I Trade For Income: My New Passive ETF Strategy + PMCC

Published Date: May 23, 2026

URL: https://www.youtube.com/watch?v=1J9Il4b28gw

Trade Setup

Note: The source transcript is a portfolio performance review and does not detail the specific entry mechanics for a new trade. The table below reflects the limited structural data provided for the “Dynamic Poor Man’s Covered Call” (PMCC).

Action (Sell (-)/Buy (+))LegDTEStrike Price / Delta TargetWidth
+ (Buy)LEAPS (Long Call)396+ Days (Based on hold time)Not detailed in source transcriptNot detailed
– (Sell)Short CallNot detailed in source transcriptNot detailed in source transcriptN/A
  • Total Capital Required: $14,000 (for the historical SPY trade) / $3,600 (for the historical QQQ trade).
  • Execution Context: The video showcases a live, historical performance review of a taxable investing account rather than a step-by-step theoretical model or live entry setup.

Strategy Application

This strategy centers around a “lazy trader” investing approach. The goal is to generate hands-off monthly cash flow by combining high-yield income ETFs with a “dynamic poor man’s covered call” (PMCC) on major indices like SPY and QQQ.

  • The Mechanics: While the exact strike selections aren’t broken down, a PMCC generally involves buying a long-term option (a LEAPS contract) to simulate stock ownership, and actively selling short-term call options against it to collect premium.
  • Strike Selection & Delta: Delta (the directional bias or “probability of success”) targets are not detailed in the source transcript.
  • Buffer Zone: Not detailed in the source transcript.
  • Time Differential: The long leg (LEAPS) was held for a significant duration (396 days) to allow the strategy to play out, completely avoiding aggressive Theta (“time decay” mechanics) on the core position until the final weeks of the contract.
  • Market Environment: This strategy is utilized in a broader income-generating portfolio heavily weighted in covered-call ETFs (like SPYI and QQQI) to act as a salary replacement for retirement.

Risk Profile

  • Wing Widths & Max Loss: Not detailed in the source transcript.
  • Assignment & Structural Risk: Not detailed in the source transcript.
  • Capital Preservation Rules:
    • Portfolio Allocation: The overall wealth strategy utilizes a strict 70/30 split—70% dedicated to passive investing accounts (like this one) and 30% dedicated to active trading accounts to isolate risk.
    • Margin Utilization: The portfolio currently deploys margin ($220,000 in buying power utilized) to enhance ETF yields, though the specific margin impact on the PMCC is not outlined.
    • Reinvestment: 100% of the cash flow generated from the PMCCs and ETF distributions is immediately reinvested to compound the account.

Expected Outcome

Specific win rates, structural zones, and probability metrics are not detailed in the source transcript. However, the historical outcome of this specific setup was shared:

  • 1. The SPY PMCC (Historical Win)
    • The long-term SPY position ran for 396 days.
    • It generated an $18,000 total gain on a $14,000 initial capital outlay, resulting in a 129% return.
  • 2. The QQQ PMCC (Historical Win)
    • The QQQ position was initiated with a $3,600 investment.
    • It has currently generated $9,921 in total gains and remains active.

Management & Exit Triggers

  • Time-Based Exit: The only explicit exit trigger mentioned is closing the entire PMCC position when the long LEAPS contract is a “couple of weeks” away from expiration to avoid holding options through their final expiration cycle.
  • Profit Targets & Defensive Stops: Not detailed in the source transcript.