The Poor Man's Covered Call

Tom Sosnoff & Tony Battista discuss buying a leap call and then selling calls against it in an IRA account. They show how this strategy can give a significantly higher return on capital than the covered call

Comments

1. My only question now is why would you want to ever sell a normal CC if you could sell a PMCC?
2. if you don't have money for buying stock can you buy covered calls and excersize the stock just to take the stock as way to acquire stocks?.
3. Greetings ... Please help me with this question ... obvious question ... what happens if in the 0.001% chance my 1 SHORT call is assigned. Below TT replied that the 1 LEAP option covers it ... but my question is what happens if I fall off the planet, do nothing ... does the Market Maker come in on that Saturday and SELL my LEAP contract to then be able to provide the 100 shares of stock that I'm obligated to pony up because of it being assigned? Thanks! THAT part has me confused ... or is it MY obligation to UNWIND the LEAPS option. Thanks!!
4. is it just me or has anyone else noticed that since this video was posted that spoke to market being so "expensive" and not wanting to tie up capital in Jul of 2013.
   
   Well, from then through May 2015 the market, by the SPY was up close to 30% counting dividends. Even people that trade for a living make poor judgement calls.
   
   Just consider the word "expensive". Rarely to you even here someone give an opinion as to what that is based on.
   
   Just know that there are ALWAYS undervalued high quality stocks available in any market. Forming an opinion about stocks in general based on arbitrary indexes is going to prevent you from making moves when there are great moves available.
   
   I love these guys and their videos, but I always keep in mind that general swags on the "market" don't tell me anything other than the "market" my not be the best time to put money into an index fund such as SPY.
5. How about choosing a 2 months expiration at the money rather than 30 days out. That way you collect more credit. If the underlying stock price falls and goes out of money, you have a quick decay at the beginning. If the underlying stock price goes in the money, you have more time for the price goes back to out of money? And keep rolling the same strike price if the price stays in the money at the expiration date.
6. I do want to touch on one thing.. If you are going to spend 7800 for 100 shares for wmt you could use that same amount of that and generate more profit because your not buying 78 dollar stock but a 2 dollar option. So your money is working 39x more efficient to do the same move. I love PM CC.
7. Nice tho limited video, ie BOTH QQQ and WMT returned about 17% ROC, full margin assumed, so the Stk CC UNDERPERFORMED the Underlying, whereas the PM CC OUTperformed, thats the No1 point No.2 is the escape Capital restrictions benefit and thus No.3 diversification > oppys
8. Can we keep rolling down? Pick a lower strike price..
9. How should this trade be handled should someone exercise the short call? I am having difficulty understanding how the LEAP confers protection in that case. I get that you are collecting premium from the forward month against the (way) backward, like a horizontal or calendar spread. It seems to have the same risk as a naked call.
10. Gentlemen, prepare to lose your shirts.
11. Covered calls do not necessarily reduce the basis of the underlying stock.  Only if the stock is assigned does the option premium get rolled into the stock basis.  Premiums gained from expired options is short term capital gains.  
    
    The poor man's covered call is not possible in retirement accounts.
12. ROC will be higher on CC with underlyings having a dividend. Won't be huge increase, but is an increase.
13. I'm watching all the tasty trade videos; and very slowly, I'm starting to grasp some of the lingo/jargon and technical terms but I am having trouble with all the abbreviations and what they mean.  Should I learn what all the technical terms and jargon means or is it something that I can learn as I go along on my way to learning how to trade?  
14. Good stuff, thanks.
15. This tape was interrupted by a failure. Can you please have it resent??