How to Trade a Poor Man’s Covered Call on IBIT: A Smarter, Lower-Risk Options Strategy for Bitcoin Exposure

Looking for a smarter way to trade Bitcoin with less capital and more control? Learn how to trade a poor man’s covered call on IBIT, a low-risk options strategy that generates income using LEAPS and short calls.

Why Bitcoin Traders Need a Better Options Strategy

If you’ve ever tried trading Bitcoin directly, you know it can feel more like a roller coaster than a rational investment. Sharp drawdowns, unpredictable catalysts, and round-the-clock trading hours make it a high-stress experience for many investors.

Enter IBIT, BlackRock’s spot Bitcoin ETF. For the first time, everyday investors can get exposure to Bitcoin inside a traditional brokerage account. No digital wallets. No passwords. No drama. And most importantly—for options traders—it’s opening the door to institutional-grade options strategies on a highly volatile asset.

But just because you can trade Bitcoin doesn’t mean you should do it recklessly.

If you're seeking a more disciplined, income-generating approach to Bitcoin exposure in your overall portfolio—with clearly defined risk and minimal capital outlay—the poor man's covered call strategy on IBIT is a compelling solution. It allows you to generate consistent premium while committing far less capital than a traditional covered call or outright ETF purchase, all without giving up meaningful upside potential.

What Is a Poor Man’s Covered Call?

A poor man’s covered call is a capital-efficient version of the traditional covered call strategy. It’s structured as a long call diagonal debit spread—but don’t let the jargon throw you.

Here’s what it means in practice:

1. You buy a long-dated (1+ years), deep-in-the-money call option (LEAPS) on the underlying asset (in this case, IBIT).

2. You sell a shorter-dated, out-of-the-money call to generate income.

That’s the core of it—you’re replicating the mechanics of owning the stock or ETF and selling calls against it, but at a fraction of the cost—often 65% to 85% less than purchasing the shares outright. This frees up capital, allowing you to diversify across a broader basket of assets with far greater efficiency.

Poor Man’s Covered Call vs. Traditional Covered Call

The poor man’s covered call strategy on IBIT reduces capital requirements by 60% to 80%, enabling you to diversify across multiple trades instead of tying up cash in a single position.

Why IBIT Is Perfect for Poor Man’s Covered Calls

Bitcoin is one of the most volatile assets in the world. That’s a double-edged sword. It offers massive upside—but also massive risk. For traders who want exposure without wild swings in portfolio value, poor man’s covered calls on IBIT offer a safer, more rational entry point.

Here's why it works so well:

• IBIT has liquid options markets.

• Bitcoin’s implied volatility means higher premiums.

• Spot Bitcoin ETFs are new—yet IBIT is already leading in volume and assets under management.

• IBIT trades at a reasonable price (~$50), ideal for LEAPS-based strategies.

This isn’t about trying to predict where Bitcoin will be six months from now. It’s about implementing a strategy that compensates you for maintaining exposure. And while direction isn’t the primary goal, upside movement certainly enhances the value of the LEAPS position.

Step-by-Step: How to Trade a Poor Man’s Covered Call on IBIT

Step 1: Buy a Long-Dated LEAPS Call

Instead of purchasing 100 shares of IBIT, you’ll use a deep-in-the-money call option—specifically, a long-term LEAPS contract with 18 to 24 months until expiration—to replicate the price movement of the ETF while committing significantly less capital.

Example:

• Underlying ETF: IBIT (iShares Bitcoin Trust)

• Current Price: ~$50

• LEAPS Selection: January 15, 2027 $38 Call

• Premium: ~$22.40

• Delta: ~0.80 (ideal for synthetic stock exposure)

💡 Why this works: The deep ITM call acts like stock ownership. A delta of 0.80 means your LEAPS will move nearly 80% in sync with the ETF.

Step 2: Sell a Short-Term Call for Income

Now sell a call 30–45 days out with a delta between 0.20 and 0.40.

Example:

• Short Call Selection: April 25, 2025 $55.5 Call

• Premium Collected: ~$1.02

• Net Basis: $20.98

📊 Return on Capital: You’ve earned a 4.5% yield on your invested capital ($1.02 / $22.40) over just 32 days. And because this process can be repeated 10 to 12 times per year, the cumulative annualized return from premium alone could approach 40%—before factoring in any potential capital appreciation from the LEAPS position.

Rolling the Trade & Managing Risk

This strategy is built for consistency, risk management, and long-term positioning—not for chasing the next parabolic surge in Bitcoin’s price. Instead of relying on unpredictable breakouts, it focuses on generating steady, repeatable income through premium collection while maintaining defined exposure to upside. It’s a structured, disciplined way to participate in Bitcoin’s potential without being at the mercy of its volatility.

Rolling Rules:

• Roll short call when premium decays by 70–90%.

• Roll LEAPS when time to expiration drops under 10 to 12 months.

• Avoid exercise risk by closing short calls before expiration.

One of the key advantages of this strategy is that it gives you more control over both your capital and your risk. If IBIT experiences a sharp decline, your downside is limited to the cost of the LEAPS—not the full loss you’d take if you owned 100 shares outright. Your risk is clearly defined from the start. If IBIT rallies, your LEAPS appreciate, even if your upside is capped by the short call.

Real Benefits of Poor Man’s Covered Calls on Bitcoin ETFs

✅ Generate Monthly or Bi-Monthly Income
✅ Reduced Capital Requirement (by 60–80%)
✅ Defined Risk Exposure on a High-Volatility Asset
✅ Reinvest Premium to Lower Cost Basis or Diversify

In a market environment where many traders chase high-risk, high-reward outcomes—swinging for the fences with leveraged bets and short-term speculation—this strategy stands out for its emphasis on patience, process, and disciplined portfolio construction. Rather than relying on unpredictable home runs, it focuses on generating steady, repeatable income with clearly defined risk, making it a far more sustainable approach for long-term success.

Final Thoughts: A Rational Way to Trade Bitcoin Options

In the world of options, chasing excitement often comes at a steep cost. High-risk trades may offer the illusion of fast profits, but more often than not, they punish undisciplined behavior. What truly pays—over months and years—is consistency, restraint, and the ability to manage risk with intention.

That’s why the poor man’s covered call strategy deserves a permanent place in the toolkit of any serious options trader looking to gain exposure to Bitcoin in a more intelligent, income-focused way.

With the emergence of IBIT, traders now have a regulated, transparent ETF that tracks spot Bitcoin and supports growing options volume. It provides the perfect foundation for professional-grade strategies—like poor man’s covered calls—that prioritize capital efficiency, defined risk, and repeatable income over speculation.

If you’re seeking a smarter way to participate in a volatile asset like Bitcoin—without overextending yourself or trying to time the next breakout—this approach offers one of the most balanced risk-reward profiles available in options trading today.

No, it won’t double your portfolio in a week. But over time, it can help you build a consistent, structured edge—and perhaps more importantly, the kind of habits that separate traders who last from those who chase and burn out.

This isn’t about getting rich overnight.
It’s about trading with purpose.
And that, ultimately, is what leads to long-term profitability.

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Probabilities over predictions,

Andy Crowder