Part 3/8:
The solution for those who cannot afford to buy the requisite shares outright is the Poor Man’s Covered Call. Instead of buying 100 shares of a stock, a trader can purchase a long in-the-money call option that acts similarly to holding shares. The preferred characteristics of this long call include having a delta of around 70—a means of forecasting a 70% chance of being profitable by expiration. By doing so, the trader controls a leveraged position in the stock while risking less capital.
For instance, if a trader chooses Apple as their stock, they could purchase a long call option that costs only a fraction of buying shares. They could then sell a shorter-term call option against the long call, recreating the income-generating mechanics of a traditional covered call.