OptionStrat

ALGN Poor Man’s Covered Call Explained

In the video, options trader Steve Gans walks through a “poor man’s covered call” on Align Technology (ALGN), showing how he layered short calls against an existing long‑call position to generate extra premium. Gans originally bought long calls when ALGN was at support, which would have yielded a $14,500 unrealized gain if held. He then sold four 180‑strike calls for $7.35 each, later buying them back at $2.70, and rolled the position by selling four 185‑strike calls for $6.70 each, locking in additional income. He emphasizes that the strategy mimics a traditional covered call without tying up $75,000 to own 400 shares; instead, only about $16,000 is at risk. The net debit fell from $16,400 to $13,720 after the two premium collections, effectively lowering his cost basis. By repeatedly rolling the short calls, traders can keep extracting premium while maintaining a limited capital outlay, making the approach attractive for retail investors seeking income and upside exposure with reduced risk.