3 Advanced Poor Man's Covered Call Tactics (To Increase Profits)

About this video

• Video Title: 3 Advanced Poor Man's Covered Call Tactics (To Increase Profits)
• Channel: Options With Davis
• Speakers: Davis (implied from channel name)
• Duration: 00:35:05

Overview

This video explains three advanced tactics for implementing the Poor Man's Covered Call strategy to potentially increase profits. The speaker details how to strategically select options, time entry points based on chart patterns and indicators, and utilize a "legging in" approach for enhanced entry and profit potential.

Key takeaways

• Tactic #1: Extrinsic Value Manipulation: Focus on buying the long call option with minimal extrinsic value and selling the short call option to capture as much extrinsic value as possible, aiming to offset the initial cost. This involves selecting deep in-the-money long calls with further expiration dates and out-of-the-money short calls.
• Tactic #2: Timing Entries: Employs bullish strategies, so timing is crucial. The video suggests entering trades during continuation patterns (higher highs, higher lows with oversold stochastic readings), at support areas (previous lows with oversold stochastic readings), or during bullish reversal patterns (lower low with bullish divergence on stochastics).
• Tactic #3: Legging In: This advanced tactic involves entering the long call and short call legs of the Poor Man's Covered Call separately, rather than as a single order. This can improve entry prices and potentially increase profits by allowing the trader to benefit from market movements between entering the long call and selling the short call, though it carries risks of poorer entry prices if the market moves unfavorably.