Poor man's covered call screener

Supported filters

Back-leg DTE (days)

Days to expiration of the long call. The Poor Man's Covered Call preset uses 60 to 130 days, long enough to sell two or more short calls against it before its own decay speeds up.

Days to expiration (days)

Days to expiration of the short front call. The preset uses 7 to 45 days, the usual monthly or shorter income cycle.

Return on risk (%)

Max profit at the front expiration divided by the net debit. The preset requires 30% or more per cycle, the figure that makes a diagonal worth managing instead of simply buying shares.

Annualized return (%)

Return on risk scaled to a year over the front call's days to expiration. The preset sorts by it; treat it as a comparison figure, since the long call cannot be rolled forever at the same price.

Probability of profit (%)

Model-estimated probability the position is profitable at the short call's expiration. The preset uses a 50% floor; the breakeven usually sits a little below the stock price.

Delta (anchor leg)

Absolute delta of the short front call. The screener builds diagonals with the short call roughly 0.25 to 0.45 delta; lower values leave more room for the stock to rise before the short call is threatened.

Distance OTM (%)

How far the short call's strike sits above the stock, as a percent. A minimum of 3% to 5% keeps upside in the trade, as it would with a covered call.

IV differential (%)

Short-leg implied volatility minus long-leg implied volatility. A positive reading means you are selling richer volatility than you are buying, which helps the short call's premium relative to the long call's cost.

IV rank

IV rank of the stock. The preset caps it at 80: very high implied volatility inflates the long call you are buying as much as the short call you are selling, and the long call is the larger of the two.

Max loss ($)

The net debit per diagonal. A cap of $1,000 or $2,000 is the main way this strategy saves capital compared with buying 100 shares.

Stock price ($)

The stock's share price. Diagonals are most useful on stocks where 100 shares would be a large position; a minimum such as $100 focuses the scan on them.

Earnings

Exclude earnings before the front expiration, as the preset does. A gap through the short strike limits your gain and a gap down can take most of the long call's value.

Ex-dividend date

The long call receives no dividends, and an in-the-money short call is likely to be exercised the day before an ex-dividend date. Exclude ex-dates before the front expiration.

Market cap ($)

Company size floor. The preset requires $10B or more, which keeps both the front and back months liquid enough to roll.

Open interest

Open interest on the less-held leg, usually the long call in the back month. A floor keeps the long call tradeable when it is time to close or roll it.

Bid-ask spread ($) ($)

Maximum bid-ask spread on the wider leg in dollars. Deep in-the-money back-month calls often have the widest markets, and you cross that spread on entry and exit.

Screening walkthrough

1. 1. Open the Poor Man's Covered Call preset

   It screens call diagonals on $10B+ companies with the short call 7 to 45 days out and the long call 60 to 130 days out, at least 30% return on the net debit, at least 50% modeled odds of profit at the front expiration, IV rank of 80 or less, and no earnings before the front expiration. It sorts by annualized return.

2. 2. Check the width rule yourself

   The rule of thumb for a poor man's covered call is that the strike width (short strike minus long strike) should exceed the net debit, so that assignment on the short call still leaves a profit after exercising the long call. The screener does not filter for this. Open each result and compare the two strikes with the net debit before you trade it.

3. 3. Place the short call like a covered call

   Use distance out of the money or short-call delta to set how much upside you keep. A short call 3% to 6% above the stock, around 0.25 to 0.35 delta, is typical. Closer strikes raise the return on the debit and the chance the stock runs through the strike.

4. 4. Favor a positive IV differential

   Add IV differential with a minimum of 0 so the short call is at least as rich in implied volatility as the long call. A diagonal is net long volatility, so paying up for the back month is the most common hidden cost.

5. 5. Size by the debit and plan the next cycle

   Set max loss to your per-position budget. The return figures cover one front-month cycle; the long call can support another short call if it has enough time left, so choose back-leg DTE with the number of cycles you want in mind, then save the scan.

Limitations and risks

• Max profit and breakeven depend on what the long call will be worth at the front expiration, which the screener models at the long call's entry implied volatility. If volatility falls, the long call is worth less and the realized return is lower.
• The screener does not check the width-versus-debit rule or filter on the long call's delta. Verify both on the trade before entering.
• The long call receives no dividends and decays. Returns are for one front-month cycle; they do not account for rolling the short call, or for replacing the long call once its time value starts to shrink quickly.
• An in-the-money short call can be assigned early, especially the day before an ex-dividend date. You would then be short 100 shares against the long call and need to exercise or sell it.
• Quotes are refreshed intraday and are a snapshot, not a live feed. Back-month in-the-money calls often have wide markets, so conservative pricing is the more realistic figure.
• This is a screening tool. It does not track positions across cycles, roll trades, or place orders.

Frequently asked questions

Is this a PMCC screener?

Yes. A poor man's covered call is a call diagonal: a longer-dated in-the-money call in place of shares, with a shorter-dated out-of-the-money call sold against it. The scanner lists it as the call diagonal strategy.

How does the screener calculate return on a poor man's covered call?

It values the position at the short call's expiration, with the long call priced by a model using its remaining time and its entry implied volatility. Max profit is the best result on that date, max loss is the net debit, and return on risk is one divided by the other. Annualized return scales that by 365 over the short call's days to expiration.

Can I screen for LEAPS as the long call?

Not in this screener. The long call's expiration can be up to 130 days out, so results are diagonals of a few months. Traders who use one- or two-year LEAPS will need to price that long leg separately.

Does the delta filter apply to the long call?

No. For diagonals, delta and distance out of the money describe the short front call. The long call is selected in or near the money, roughly 0.55 to 0.80 delta; open a result to see its exact strike and delta.

Poor man's covered call or a real covered call?

The diagonal ties up a fraction of the capital and caps the loss at the debit, but it pays no dividends, it is net long volatility, and the long call expires. A covered call on shares is simpler and can be held indefinitely. The covered call screener covers the share-based version.

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