Poor Man's Covered Call simulator
A long call standing in for shares, with a shorter-dated call sold against it. Move the long strike and watch two things at once: how much capital you save, and how much less like stock your substitute behaves.
Course catalogue99 lessons
The stock substitute
Model price $33.80, delta 0.93, of which $3.80 is extrinsic value that decays whether or not the stock moves.
The call you sell against it
Payoff
Shown at the short call's expiration, when the long call still has 335 days of life left, which is why the curve is not the straight line a real covered call would draw.
Against 100 shares
Maximum loss is the net debit, and you reach it if the stock falls below the long strike . The same $3,220 you saved by not buying shares. A real covered call would still leave you holding stock worth something.
The theory behind it
- Running a Covered Call Without Owning the SharesA LEAPS call stands in for 100 shares, at a fraction of the capital and with a new risk.
- A Calendar That Also Takes a DirectionChange both the strike and the date, and a calendar becomes a directional position.
- Long-Dated Contracts and What ChangesSlow decay, real rate sensitivity, and behaviour much closer to stock than to a monthly.
This simulator models outcomes at expiration from the inputs you supply. It fetches no market data, and the prices you type are not quotes. Real results differ: assignment can happen early, spreads and commissions are charged on every leg, and a position rarely travels in a straight line to the outcome shown.