Strategy Source

• Creator/Channel: Tom King
• Published Date: March 29, 2026 & April 29, 2026
• URL: https://www.youtube.com/watch?v=oAYSr8C3bSM & https://www.youtube.com/watch?v=0nOu5I6_EgE

Trade Setup

(Note: You can run a simplified version of this strategy by purchasing a standard 80 Delta (strike metric / directional bias) LEAP call in place of the first three legs below).

Action (Sell (-)/Buy (+))	Leg	DTE	Strike Price / Delta Target	Width
+	Long Disaster Put	12 to 24 Months	20% Out of the Money (OTM)	N/A
–	Short Put (Synthetic Leg)	12 to 24 Months	At the Money (ATM)	N/A
+	Long Call (Synthetic Leg)	12 to 24 Months	At the Money (ATM)	N/A
–	Short Weekly Call	7 to 14 Days	Dynamic (20 to 70 Delta)	N/A

• Total Capital Required: The overall structure costs approximately 25% to 33% (one-quarter to one-third) of the total capital required to purchase 100 shares of the underlying stock outright.
• Execution Context: The videos are educational presentations and interviews detailing the conceptual and theoretical mechanics of the strategy.

Strategy Application

The Dynamic Poor Man’s Covered Call is an income-generating strategy that uses leveraged options to replicate owning 100 shares of an ETF while consistently collecting weekly “rent.”

• The Core “Synthetic” Engine: To reduce capital outlay even further than buying a standard deep-in-the-money LEAP, you build a synthetic stock position. By purchasing an ATM call and selling an ATM put at the same expiration roughly a year out, the premium collected from the short put heavily subsidizes the cost of the long call.
• Dynamic Strike Selection: The defining “dynamic” feature of the trade is how you select your short weekly call strikes. Instead of mechanically selling out of the money every week, you dictate the strike based on the 8 and 21 Exponential Moving Averages (EMA):
  • Uptrend (8 EMA > 21 EMA): Sell slightly out of the money at a 20 to 30 Delta to give the underlying position room to appreciate.
  • Flat Trend: Sell right at the money at a 50 Delta to maximize the collection of extrinsic value.
  • Downtrend (8 EMA < 21 EMA): Sell deep in the money at a 60 to 70 Delta.
• Buffer Zone: You are targeting the collection of 0.75% to 1% of the overall stock’s price in pure extrinsic value each week. This steady income generation acts as your safety cushion. When the market pulls back, selling in-the-money calls provides both intrinsic and extrinsic protection, buffering the drop of your long synthetic position.
• Time Differential & Theta: This is a long-term campaign. At the targeted rate of extrinsic collection, it takes roughly 18 weeks (about four months) to entirely pay off the foundational cost of the trade. You must close or roll the long legs when they reach roughly 60 to 90 Days to Expiration (DTE), as Theta (“time decay” mechanics) and Gamma (“accelerated risk near expiration”) will begin to rapidly work against the long options.
• Market Environment: Stick to highly liquid, broad-market ETFs like SPY or QQQ. Avoid individual stocks entirely to eliminate the gap-down risk associated with sudden earnings misses or corporate scandals. Look for an ETF with an RSI above 35 that is trading above its 200-day moving average, ideally entering on a brief pullback to the 21 or 50 EMA.

Risk Profile

• Wing Widths & Maximum Loss: Downside structural risk is capped by purchasing the long “disaster put” placed 20% below the current stock price. Without this disaster put, a standard synthetic stock position carries the same downside risk as owning 100 shares outright.
• Assignment Risk: Getting assigned early on the short weekly calls is highly unlikely unless you hold them until there is absolutely zero extrinsic value left near expiration.
• Capital Preservation & Sizing: Leverage works both ways. Because the trade only requires 25% to 33% of the capital of owning the actual stock, you must size the trade exactly as if you were buying 100 shares outright. Do not buy extra contracts simply because they are cheaper. A loss on a single trade should never exceed a 2% to 4% drawdown of your total portfolio net liquidity.

Expected Outcome

1. The Extrinsic Collection (Your Base Win)

The absolute mathematical goal of the strategy is the steady, mechanical decay of time value. If the stock chops sideways or grinds slowly, your short calls will expire worthless or lose value, allowing you to generate roughly 3% per month in pure extrinsic premium relative to your capital outlay.

2. The Directional “Seesaw”

Because the overarching goal is to keep the position delta-neutral to slightly delta-positive, the trade dynamically hedges itself.

• In a bull market, the short call will show a loss, but this is mechanically offset by the heavy profits of the long synthetic position.
• In a down market, the long synthetic loses value, but the heavy 60–70 Delta short calls sold against it retain their premium, acting as a cushion to offset the bleeding.

Management & Exit Triggers

Defensive Stop Loss: You must implement a hard, non-negotiable 30% stop loss on the entire net cost of the campaign. If the total P&L of the structure hits -30%, close the position completely with no exceptions.

Primary Target: Close and roll the short call the moment you capture 80% to 90% of its extrinsic value. Immediately sell a new one to keep the income engine running.

Secondary Target: Roll or exit the long foundational legs entirely when they reach 60 to 90 days to expiration (or hit roughly a 65 Delta) to avoid accelerated time decay.