🎓 Topic of the Week: Poor Man’s Covered Call Ladder Strategy Explained

For many traders using Poor Man’s Covered Calls, the strategy starts with promise—but quickly turns messy. You enter a few trades, collect some decent premium, and think you’re on track to build a consistent income strategy. But before long, the cracks start to show.

All your short calls expire around the same time. Your LEAPS begin to drift. Assignments sneak up on you. And suddenly, what felt like a structured income approach becomes a scramble to reset multiple trades at once.

It’s not a failure of the strategy—it’s a failure of timing.

That’s where laddering comes in.

By spreading out expirations, strikes, and symbols across a rotating schedule, you can turn an otherwise choppy income stream into a reliable, smooth flow of premium. In this guide, I’ll walk you through how to build a PMCC ladder the right way—one that pays you every week or month, while reducing stress and making your portfolio easier to manage.

This isn’t about chasing more trades. It’s about building a smarter structure.

Most traders structure their PMCC portfolios like a single-layer cake: one flavor, one height, one timing. But professional income traders think in terms of layers and timing diversification.

In this article, we'll break down:

• What laddering is and why it works so well with PMCCs.

• How to build a time-diversified portfolio of LEAPS and short calls.

• Tactical examples across sectors and expirations.

• How to think about strike selection, assignment, and capital rotation.

• How to use PMCC ladders in small and large accounts alike.

Let’s start by reviewing the building blocks.

The PMCC Framework (Quick Refresher)

A Poor Man’s Covered Call is a synthetic version of a covered call that uses less capital:

1. Buy a deep-in-the-money LEAPS call (with 0.75+ delta, often 12-24 months out). I prefer 18+ months out.

2. Sell a short-dated call (1-60 days to expiration, usually OTM). I prefer 30+ days to expiration with a delta between 0.15 and 0.35.

This creates a position that mimics a covered call but uses about 15-35% of the capital of 100 shares.

Advantages:

• Lower capital requirements.

• Higher potential return on capital.

• Still allows you to collect time premium.

Risks:

• LEAPS decay (albeit slow).

• Assignment risk on the short call.

• Delta drift on the long call as the trade matures.

What is Laddering?

Laddering is a technique borrowed from fixed income investing. Bondholders stagger maturities so they don’t have to reinvest everything at once.

In PMCCs, we do the same by:

• Staggering LEAPS expirations.

• Staggering short call expirations.

• Staggering strike selections / deltas.

• Rotating across uncorrelated stocks or ETFs.

This reduces your exposure to any single week, cycle, or name. It adds structure to your positions so you're not managing everything at once.

Step-by-Step: Building a Laddered PMCC Portfolio

Let’s now go deep into each component.

1. Laddering LEAPS Expirations

Instead of buying 5 LEAPS contracts that all expire in January 2026, you might stagger them like this:

• 2 contracts expiring October 2027

• 2 expiring January 2028

• 1 expiring April 2028

This gives you more flexibility. As the market shifts, implied volatility changes, or LEAPS get too expensive, you can rotate capital instead of rolling your whole portfolio.

2. Laddering Short Call Expirations

A core mistake newer traders make is selling all short calls on the same Friday. This concentrates your cash flow and risk.

A better approach might be:

• Sell ⅓ of your short calls with 14-21 DTE (days to expiration)

• Sell ⅓ with 30+ DTE

• Sell ⅓ with 45+ DTE

This structure ensures that some options premium is hitting your account every week. It also lets you respond incrementally to volatility shifts, overbought/oversold conditions, and changes in IV Rank.

3. Laddering by Stock and Sector

Diversification isn’t just a buzzword. It’s essential to reduce assignment risk, sector-specific events, and correlation exposure.

Ladder across:

• High-IV stocks (for yield)

• Low-beta stocks (for stability)

• Defensive sectors (e.g., Utilities, Consumer Staples)

• Cyclical sectors (e.g., Energy, Industrials)

Sample Mix:

• JNJ (Healthcare)

• XLU (Utilities ETF)

• MSFT (Tech, stable growth)

• WMT (Defensive Retail)

• GLD (Commodity proxy)

4. Laddering by Delta

You don’t need to use the same delta across every position. Blend risk.

Delta is a probabilistic measure—it tells you how likely that option is to finish in-the-money, and how much its value will move with the stock.

Sample Delta Ladder:

• 0.10-10.5 delta short calls: low premium, high probability of expiring worthless

• 0.25-0.30 delta calls: balanced risk/reward

• 30+ delta: aggressive income, higher assignment risk

This lets you tailor risk and control capital rotation by design.

Click on the following links if you would like examples of how to build an All-Weather Portfolio or Dividend Aristocrats portfolio. 

Assignment Management in a Ladder

Key Tip: In a laddered structure, assignments are less stressful.

• You’re not rolling 10 positions at once

• You can let some calls get assigned, exit early, or roll selectively

• Volatility spikes? Roll the short calls with highest DTE or delta

Also, since your LEAPS are deep ITM, even if assigned early, you can often exit the synthetic for a small gain/loss and reposition.

Scaling PMCC Ladders in Smaller Accounts

You don’t need $100K to do this.

A 3-position ladder might look like:

• XLU Jan 2027 LEAPS with weekly short calls

• WMT Mar 2028 LEAPS with biweekly calls

• GLD Apr 2028 LEAPS with monthly calls

How to Track Your Ladder

Use a simple spreadsheet with:

• Underlying symbol

• Long LEAPS cost basis, expiry, and delta

• Short call details (strike, DTE, premium collected)

• Running P&L

• Breakeven prices

You can also track:

• Income collected per week

• Portfolio delta

• Sector concentration

I will post a simple spreadsheet in Google Sheets for everyone to use in an upcoming post. Stay tuned! 

Common Mistakes to Avoid

• Concentrating in one expiration month.

• Chasing too much premium (using 50+ delta short calls).

• Forgetting to rotate LEAPS when they get within 9 months of expiration.

• Letting IV Rank fool you – higher premium doesn’t always mean better risk/reward.

Conclusion: PMCC Ladders Are the Income Blueprint

If your goal is consistent premium, it’s not about prediction—it’s about structure and timing.

One of the challenges with PMCCs, especially when first building a portfolio, is that most traders set up several trades at once: same expirations, similar strikes, often the same stock or sector. That works—until everything needs attention at the same time.

Laddering solves that. By spreading out your positions—across expirations, symbols, and deltas—you create a system that keeps your trades moving in smaller parts rather than all at once.

You’re no longer managing one big portfolio reset every 30 days. Instead, you’re making small, regular adjustments. That’s a more manageable, consistent, and less stressful way to trade.

Here’s what that structure delivers:

🔄 Predictable Trade Timing

With a ladder in place, you always have something coming due—but never everything at once. One position might have 14 days to expiration, another 21, another 30. This spacing gives you time to roll or adjust based on market context, not urgency.

When premium flows in on a rolling basis, you’re not waiting weeks to re-engage or scrambling to deploy capital across multiple trades at the same time.

⚖️ Balanced Risk

When all your trades cluster in the same sector or expiration window, a single news event or volatility shift can impact everything. Laddering helps spread that risk.

By diversifying across tickers, sectors, and timing, you avoid overexposure to any one outcome. If something goes wrong—earnings surprise, macro headline, sudden IV crush—it won’t affect the entire portfolio.

🛠️ Easier Adjustments

When your short calls are laddered, you can make trade decisions more deliberately. You’re not reacting under pressure with five trades to manage in the same week. Instead, you’re updating one or two positions at a time.

This makes it easier to take advantage of favorable conditions—like rolling early when IV spikes or adjusting strikes based on price action—without disturbing your whole setup.

🧭 No Guesswork, Just Process

This approach removes a lot of emotional decision-making. You’re not relying on perfect timing or a market forecast. You’re executing a plan that keeps your trades moving in a steady cycle.

You’re not trying to guess the next big move. You’re staying positioned, so you’re never overexposed, never flat-footed, and never stuck managing everything all at once.

That’s the benefit of a laddered PMCC structure: fewer surprises, more flexibility, and a portfolio that stays active without becoming overwhelming.

Probabilities over predictions,

Andy Crowder

If you want to dig deeper into Poor Man’s Covered Calls please feel free to read my featured report: Poor Man’s Covered Calls Explained: A Smart Strategy for Today’s Market.

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