Does Poor Man's Covered Call (PMCC) actually work?

MARGINAL

Real but small -- not worth what it costs to run.

The claim

A long LEAPS call + rolling short calls = a cheap covered-call income machine — Diagonal / PMCC crowd

What we did

Tested against Net of real bid/ask incl. the wide LEAPS spread, vs. just being long, 2014–2025, real SPY bid/ask, ~13 short rolls/campaign.

The result

Result: 434.0 expectancy $/campaign (~6mo, net)

67% win, $434/campaign, worst -3713, maxDD -8051

Verdict

It made money ($434/campaign, 67% win) — but ONLY as leveraged long SPY. The call-selling 'income' it's sold for was a -596/campaign DRAG: in a bull market your short calls keep getting run over. Capped-upside beta, not income. And real downside: worst -3713, maxDD -8051.

What the test did and did not do

net of real costs
point-in-time data
checked for look-ahead
tested out of sample

Almost nobody publishing a backtest says which of these they did. We list the ones we failed as well as the ones we passed.

Tested 2026-06-23. The same treatment, applied to every other system, is on the test bench.

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Written with AI assistance from our own test database. The numbers are computed, not composed.
General market commentary for education, not personalised investment advice. Backtested results are hypothetical. Trading carries a real risk of loss.