Best Stocks for Poor Man's Covered Call in 2026

Best Stocks for Poor Man's Covered Call in 2026

The best stocks for a poor man's covered call (PMCC) are the ones with liquid LEAPS and liquid short-dated calls: SPY and QQQ, then large, heavily traded stocks like AAPL, MSFT, NVDA, AMZN, GOOGL, META and JPM. On top of that, pick a stock you'd be fine holding if it drops, because the LEAPS behaves a lot like the shares. Implied volatility then decides when to open the trade, and it works in opposite directions for the two legs. The table below shows each ticker's IV rank and IV percentile from the IV history I store for our screener, dated so you can see how old it is.

Watch the short

Where IV stands on the usual candidates (latest readings as of 23 September 2026)

*Short history: 141 readings for WFC and 144 for CVX, so their range covers less than a year of data. Treat their rank and percentile as rough.

ATM IV is the at-the-money implied volatility of the nearest standard monthly expiration at least a week out, backed out of real option prices. It is not LEAPS IV. A long-dated LEAPS has its own implied volatility, and it usually moves less than the front month. Rank and percentile use up to 252 stored daily readings per ticker. For the tickers without an asterisk our history starts between mid-May and early July 2025, so the window is longer than a year on some and shorter than 252 readings on others (details in IV rank vs IV percentile). I left out MRK because its latest reading is from 10 August 2026.

Three of the big tech names were at the bottom of their own range. AAPL, NVDA and MSFT were all at or below the 9th percentile, so their front-month IV was cheap relative to its own history.

At the other end, six of the 13 were above the 50th percentile: META, CVX, WFC, XOM, GOOGL and JPM.

The absolute level matters too. At 30 days, the expected move is roughly IV × √(30/365), which gives about ±13.0% for META, ±6.4% for AAPL and ±3.4% for SPY at the IVs above. A short call a fixed distance out of the money pays far more on META than on SPY, for the simple reason that META is expected to move a lot more.

How IV affects each leg

A PMCC is a diagonal spread. You buy a long-dated, deep in-the-money call (the LEAPS) and sell short-dated, out-of-the-money calls against it, one cycle after another. IV pulls on those two legs in opposite directions.

The LEAPS you buy. A long call gains value when IV rises and loses value when it falls. So you want to buy it when IV is low for that ticker: you pay less for the same strike, and a later rise in IV works in your favour. Going deep in the money helps here, because most of the price is then intrinsic value, which doesn't depend on IV at all.

The short calls you sell. These pay more when short-dated IV is high. A low IV percentile means each cycle brings in less than usual for that ticker.

That leaves a trade-off rather than a single "best" IV:

• Low IV percentile (AAPL, NVDA, MSFT in the table): a relatively cheap time to buy the LEAPS, going by front-month IV, but the first few short calls pay little. If IV rises later, both legs benefit.
• High IV percentile (META, CVX, WFC): the short calls pay well, but you're buying the LEAPS while volatility is elevated. If IV falls back, the LEAPS loses some value even when the stock doesn't move.

The data in the table is front-month IV, so it speaks most directly to the short-call leg. For the LEAPS itself, check that contract's own IV (the LEAPS watchlist further down tracks it daily).

Front-month and long-dated IV tend to move in the same direction, but they don't move by the same amount.

My recommendation: open a new PMCC when IV percentile is low to middling for the ticker, and accept smaller short-call credits for a while. Buying the LEAPS at the top of the IV range is the harder way round.

The shortlist

These are picked on liquidity and stability, not on current IV.

IV changes every week. Liquidity and the character of the business change slowly.

Index ETFs: SPY, QQQ. Among the most actively traded options there are, with long-dated expirations and no single-company earnings. The catch is low absolute IV (11.9% for SPY on our snapshot date), so short calls pay less per cycle. The share prices are high too, so even the LEAPS is a sizeable outlay in dollars.

Mega-cap tech: AAPL, MSFT, AMZN, GOOGL, META, NVDA. Liquid LEAPS, many strikes, and higher IV than the ETFs. Each reports earnings every quarter, and a short call that spans a report can end up deep in the money overnight. On our snapshot date AAPL, MSFT and NVDA had cheap front-month IV for them, and META had expensive IV.

Banks: JPM, WFC. Liquid options and steadier businesses than most of tech. JPM's IV percentile was 59. WFC was higher at 71, on a shorter history.

Energy: XOM, CVX. Their prices follow oil more than the stock market, which spreads your risk if the rest of the book is tech. Both were above the 60th percentile on our snapshot date (CVX on a short history).

Pharma: PFE. A lower share price, so the LEAPS costs fewer dollars per contract. That also means smaller short-call credits in dollars. Its IV percentile was 36.

Picking the LEAPS and the short call

Liquidity on the LEAPS leg

Spreads on LEAPS are wider than on front-month options, and you pay them twice: once to open and once to close or roll.

Say a LEAPS call is quoted $32.40 bid and $33.60 ask, and you pay the ask. That's $0.60 per share above the mid, or $60 per contract, before you've sold a single call. If your short calls bring in $1.50 a cycle ($150 per contract), the entry spread alone eats 40% of the first cycle. Use limit orders at or near the mid, and skip tickers where the LEAPS spread stays wide.

Deep in the money, long dated

Take a hypothetical stock at $100. An 18-month $70 call priced at $33 has $30 of intrinsic value ($100 − $70) and $3 of time value. The $3 is what decays.

The $30 moves with the stock, much like owning shares, for $3,300 per contract instead of the $10,000 that 100 shares would cost.

A strike closer to the money is cheaper, but more of the price is time value, and it tracks the stock less closely. For the expiration, Cboe lists LEAPS with expirations up to three years out. Longer costs more, decays more slowly per day, and gives you more short-call cycles before you have to roll the LEAPS.

The width test

This is the check that keeps a PMCC from losing money on a rally:

Short strike − LEAPS strike  >  LEAPS price − short call credit

The left side is what the spread is worth at minimum if the stock runs through the short strike. The right side is your net debit. With the $70 LEAPS at $33, selling a $105 call for $1.50 gives a width of $35 against a net debit of $31.50. That leaves at least $3.50 per share if the stock blows through $105, plus whatever time value the LEAPS still has.

If the width is smaller than the net debit, a sharp rally locks in a loss.

Earnings and ex-dividend dates

Check both before you pick the short call's expiration.

Earnings can gap the stock through the short strike. An ex-dividend date raises the chance of early assignment on a short call that's in the money with little time value left. In a PMCC you don't hold shares, so assignment leaves you short 100 shares until you exercise or sell the LEAPS. ETFs have no earnings, but they do pay distributions.

Checking a candidate in Days to Expiry

The Strategy Analyzer has a LEAPS tab that lists long-dated calls for a ticker by delta range, liquidity and days to expiration.

Strategy Analyzer LEAPS tab with delta range, liquidity filter and days-to-expiration settings

View in app →

Once you've picked a contract, the LEAPS watchlist tracks its mid price and its own implied volatility day by day, next to nearby strikes. That's the LEAPS-specific IV the table above doesn't show. The screenshot below is from February 2026.

LEAPS watchlist showing daily mid price and IV for a single LEAPS contract, with a nearby-strikes comparison

View in app →

What to skip

Managing the short call

Most of the work after entry is the short call. When it's well in profit, closing it early and selling the next one is common. When the stock runs toward the short strike, you either roll it up and out for a credit or close the whole diagonal. Rolling covered calls covers the mechanics, which are the same here. The full strategy, including how it compares with a regular covered call, is in Poor Man's Covered Call.

The bottom line

Pick the ticker on liquidity and on whether you'd hold the stock: SPY and QQQ first, then the liquid mega caps, banks and energy names. Then use IV percentile for timing, keeping in mind that low IV favours the LEAPS you buy and high IV favours the calls you sell. At the 23 September 2026 snapshot AAPL, NVDA and MSFT sat near the bottom of their IV range, a reasonable time to buy a LEAPS on them going by front-month IV (check the LEAPS contract's own IV too), with thin short-call credits to start.

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