Poor Man’s Covered Call Calculator

Estimate a poor man’s covered call, or long call diagonal spread, at the short call’s expiration. The long-dated call is marked with Black-Scholes and an intrinsic-value floor.

Currency

Formatting only; no exchange-rate conversion.

Stock price at short-call expiration

The scenario price used for the result.

Long call strike

The long-dated call normally uses the lower strike.

Short call strike

The near-term call expires first.

Long call premium per share

Short call premium per share

The short premium reduces the initial debit.

Days remaining on long call

Measured at the short call’s expiration, not today.

Expected long-call IV

Annual implied volatility in percent at the short expiration.

Risk-free rate

Continuously compounded annual rate in percent.

Dividend yield

Continuous annual yield in percent.

Number of spreads

Shares per option contract

US equity options commonly use 100; verify the contract.

Total strategy fees

Opening and modeled closing or exercise costs for the full position.

This is a mark-to-model estimate at the short expiration. It is not a live quote, assignment forecast or guarantee that the long call can be closed at theoretical value.

Profit / loss at short expiration—

Return on net debit—

Net entry debit—

Long call estimated value—

Long call remaining time value—

Short call intrinsic value—

Modeled break-even prices—

Modeled peak profit at short strike—

Maximum loss if both calls expire worthless—

Exercise-value profit floor above short strike—

Profit / loss at long strike—

Price range scanned—

Stock price at short expiration	Long call estimate	Short call intrinsic	Strategy profit / loss	Return on debit

What is a poor man’s covered call?

A poor man’s covered call (PMCC) replaces the shares in a traditional covered call with a lower-strike, longer-dated call. A higher-strike call with an earlier expiration is sold against it. The position is also a long call diagonal spread because the calls use different strikes and expiration dates.

This page consolidates poor man’s covered call, PMCC, long call diagonal spread, diagonal spread profit, break-even and payoff estimates in one URL. A stock covered call and a same-strike calendar spread are different structures.

Poor man’s covered call formulas

Entry debit per share = long call premium − short call premium
Net entry debit = entry debit per share × shares + fees
Long call mark = greater of Black-Scholes value and intrinsic value
Profit = (long call mark − short call intrinsic − entry debit per share) × shares − fees
Return on debit = profit ÷ net entry debit × 100

At the short expiration, the short call is worth its intrinsic value. The long call still has time remaining, so its value depends on the stock price, remaining days, expected implied volatility, rates and dividend yield. Break-even prices are therefore numerical roots of the modeled profit equation rather than fixed values known from the two entry premiums alone.

Verified example

Buy one 300-day-remaining US$80 call for US$25 and sell one US$110 call for US$4, with 100 shares per contract and US$4 total fees. The net debit is US$2,104. At the short expiration with stock at US$110, 30% expected IV, a 5% risk-free rate and no dividend yield, the long call is estimated near US$34.30 per share. The short call has no intrinsic value, modeled profit is about US$1,325.99 and the break-even is near US$94.95. Full displayed values use the unrounded model.

How to interpret the results

Modeled peak profit is evaluated at the short strike, where the short call begins offsetting additional long-call gains.
Exercise-value profit floor equals the strike width less the net debit. Selling the long call instead of exercising it may preserve additional time value.
Maximum loss if both calls expire worthless is the net debit. A real trade can also face execution, assignment and liquidity costs not entered here.
Break-even prices change when expected IV, remaining time, rates or dividend yield change. There can be zero, one or two roots in the displayed range.

Assumptions and limits

The long leg uses Black-Scholes-Merton with an intrinsic-value floor. This avoids marking a deep in-the-money equity call below immediate exercise value, but it does not fully model American-option early exercise.
The short call is evaluated exactly at expiration. Before expiration it retains time value.
The calculator assumes equal numbers of long and short calls, a lower long strike and a positive net debit.
It excludes live bid-ask spreads beyond entered fees, taxes, margin interest, discrete dividends, rolling, early assignment, exercise decisions and changes in volatility skew.
Currency selection changes formatting only. Every monetary input must use the same currency.
Inputs are educational scenario assumptions, not investment advice or a guarantee of execution or return.

Important: a PMCC is not fully covered by shares. Early assignment of the short call can require closing or exercising the long call, and broker treatment can differ.

Related calculators

Use the Covered Call Calculator for a stock-plus-short-call position, the Calendar Spread Calculator for equal strikes, the Black-Scholes Calculator for one theoretical option value, and the Options Profit Calculator for a single call or put.