PMCC (Poor Man's Covered Call) Calculator
Calculate the entry cost, max profit, and return on capital for your diagonal debit spreads immediately below, or scroll down to learn how to build this exact logic into your Google Sheets.
How to Build a PMCC Option Calculator in Google Sheets
The "Poor Man's Covered Call" (PMCC) is a diagonal debit spread strategy used to replicate a covered call with less capital. Instead of buying 100 shares of stock, you buy a deep-in-the-money (ITM) LEAPS call and sell a near-term out-of-the-money (OTM) call against it.
If you prefer to track your trades in a spreadsheet, you can replicate the logic of the calculator above using simple formulas. Below is a guide to setting up your own PMCC Option Google Sheets Calculator.
Column Setup
Set up your Google Sheet with the following headers in Row 1:
| Cell | Header Name | Example Data |
|---|---|---|
| A2 | Long Strike | 100 |
| B2 | Long Premium (Debit) | 15.50 |
| C2 | Short Strike | 115 |
| D2 | Short Premium (Credit) | 2.50 |
Formulas
Copy and paste these formulas into the respective cells to calculate your metrics automatically:
1. Net Debit (Total Cost)
This is the actual capital required to place the trade. It is calculated as the price paid for the Long LEAPS minus the credit received from the Short Call.
Formula for Cell E2: =(B2 - D2) * 100
Note: We multiply by 100 because standard equity options contracts cover 100 shares.
2. Max Potential Profit
The maximum profit occurs if the stock price closes at or above the Short Strike price at the short expiration. The formula is: (Width of Strikes – Net Debit Per Share) × 100.
Formula for Cell F2: =((C2 - A2) - (B2 - D2)) * 100
3. Return on Capital (ROC)
This percentage tells you how efficient your capital usage is compared to the potential reward.
Formula for Cell G2: =F2 / E2
Format this cell as a percentage in Google Sheets.
4. Intrinsic Breakeven Price
This is the stock price at which the intrinsic value of your position covers your net cost. While the LEAPS will still hold extrinsic value, this is the safest baseline for risk management.
Formula for Cell H2: =A2 + (B2 - D2)
Important Rules for the PMCC Strategy
When using this calculator or your Google Sheet, keep these critical rules in mind to ensure a valid trade structure:
- Strike Width vs. Debit: Your Net Debit should generally be less than the width of the strikes (Short Strike – Long Strike). If you pay more for the spread than the width of the strikes, you have no upside potential at the short expiration.
- Delta Selection: A common setup is buying a .80 Delta (or higher) LEAPS and selling a .30 Delta (or lower) short call.
- Time Decay: The goal is for the short option (which you sold) to decay in value faster than your long LEAPS option.