$GOOGL · Invest with Henry · 2026-11-04

So, I'm going to go into my portfolio and I want to show you Google stock because Google stock has gone down a lot , and this stock is creating a very good opportunity for a poor man's covered call.

Google has fallen 24% in the last 3 months. It is currently trading at $277 as I make this video. I'm choosing Google because the poor man's covered call strategy is essentially the same as a normal covered call strategy.

So, you'll want to choose a stock that has been sold off and dropped significantly.

And if it sells and goes down, selling the poor man's covered call is very profitable because it is a bullish strategy.

This is a bullish strategy where you can make money if the price of the stock increases. But it's really impressive because it's possible to make a profit from a poor man's covered call , even if the stock price remains unchanged.

Let's open a poor person's covered call step by step. I'm going to go to Trade and open Google Options and the first thing I'm going to do is buy a call put option, okay?

So, when I bought the call option, it cost me about $28,000 to buy 100 shares of Google , right? 28 thousand.

Now, what I would do instead is buy an in-the-money call option. So, the strike price of 270 seems pretty good, right?

I'm going here, and you can see that the premium is $52. This means I'm controlling 100 shares for $5,200 , which would normally cost me $28,000.

Essentially, this Leap Call option is giving me the opportunity to trade at about one-fifth of the cost of buying 100 shares. This option will expire on December 17, 2027. Its delta is 0.65.

Delta essentially measures how much the option price will change if the underlying stock price moves by $1, all other things being equal. So for this strategy, I usually prefer a high delta, around 0.7.

Here the delta is 0.65, which means that if the stock moves by $1, this option will move by 65 cents.

First, I want to make sure there is enough volume , because this is very important. And the lower the bid-ask spread here, the better. So, the bid is $51.30 and the ask is $52. The lower it is, the lower your losses will be.

Think of it as a kind of market. If the market is very volatile and there is not enough liquidity , no buyers or sellers, then it is not a good market to trade or profit from price differences, right ?

And when there are many buyers, suppose you go to a dealership and there are thousands of Toyota Corolla cars, which cost about $18,000; One costs $17,900, the other $18,100. You won't cheat much because the entire market is very efficient.

Therefore, the lower the bid-ask spread, the better and more efficient the market. So here, it's really good. This is a pretty low bid-ask spread.

So when I look at the 270 call option , it's pretty simple, it costs $5,200. I think we are ready to move on to the next step. So what I'm going to do now is, I'm going to sell a call option, right ?

Now, what I'm going to do is, I'm going to sell a call option with a short-term expiration date. And we'll look at this chart , it's going to change right now. You will see what is going to happen.

So I'm choosing January 15, 2027, okay ? Very short expiration date. And I'll go a little bit into Out of the Money. I'm choosing 290, okay?

This 290, you can see now, I'm zooming in here. I'm buying 270, right? I'm paying $5,200. This 290 is reducing my cost by more than $10 because I am selling this option. So the option I'm selling brings my total cost down to $41.

Awesome, which is actually a whole $1,000 less than $5,000.

Speaking of capital efficiency, it's extremely effective and great for portfolios that are really looking to grow. So see, this is a bullish or upward market strategy. I'm scrolling down here.

As you can see, the risk is if the share price goes down. You can lose 100% of the money you invest in this option. So, in this example, you could lose the entire $4,100. That's the risk. That's the negative side of it.

However, I will teach you how to control this risk, okay? Basically, I've never been in a situation where I lost all my money. Because I usually close the trade if it goes against me.

Let's talk about different situations. What could happen? Where will the stock go and how will that affect the Poor Man's Covered Call ? And what does this chart actually show?

First, here is Google's current price. If nothing happens, the potential profit would be $572.

Now, why would this happen? Because the potential profit you are seeing now is that this option will expire at expiration. The 290 call option will expire because it has a short maturity, and we will keep the 270 call option.

It will remain in the account because its expiration is far away, right? So, at the end of the term, this option will earn us $1,085. This option will change slightly. Its price will drop slightly because if the stock doesn't move, some theta will work.

Theta is the time decay of an option, or the decrease in value over time. So, this option will lose some value. It will lose a little value. However, the money we are earning from short calls is more than the value lost from long calls.

And the reason for this is that it is a short-term call option. It has high theta. It has a high rate of degradation because its shelf life expires quickly. Since it expires quickly, even if the stock price is nothing or stays the same, you can still make a profit of $583, because one option is completely exhausted and the other loses some value.

$583 is actually very attractive. Personally speaking, a profit of $583 on $4,100 seems good to me , because when I do the math, I see that I'm getting about 15% on the premium or capital, which seems pretty attractive to me for a 72-day timeframe.

But it's even better than that, because this only happens if the share price stays the same. You can see how powerful this strategy is for growing a portfolio. Because as you understand , this applies to the share price staying the same.

Watch it now. What happens if the price goes up? If Google goes to 285, you'll see how quickly the expected profit changes. This is a huge change, because basically we can make a profit here at a maximum of 290.

If Google reaches 290, that is the maximum limit. Because that is our short strike price. This is the strike price we sold for the short call option. So, in this example, we can make a maximum profit of $1,388 , which is quite attractive to me compared to my $4,000 investment and risk.

However, you won't get it perfectly. Not at all. It's not like Google will end up at 290 at the end of that short-term period. That is unlikely to happen. Luck plays a big role there.

But the good news is , you don't need perfect luck. You can take profit anywhere within this range if Google's price increases.

In fact, if Google even goes above 290, you will start losing money because the short call starts working against you. But the long call is so powerful that, to be honest, my exit strategy is usually, when I get close to the 290 level in this example, I close the position.

And you know, this is the easiest time to get out of a stock , because you've already made your maximum profit in a short period of time , right? If you wait any longer, the stock will fluctuate within this range and you will likely miss out on some profits.

So, this is the easiest way to handle this strategy.

Now, if the stock keeps going up , that's fine too. Many, many of my students use 'Pur Man's Covered Call' and then it goes in-the-money. Then I tell them, "Listen, wait a little longer, because here we can adjust the strike price or the fixed price instead of just waiting."

So, let me go upstairs. What we can do is, if the expiration time is approaching, we can close the position at 290 and sell another option. This is a very versatile technique, I hope I'm not confusing you.